Often, papers I find to highlight involve a lot of quanti-mumble to get to their points which makes the process of summary writing challenging. Not so with today’s piece which couldn’t be clearer.
Sumit Agarawal of the Business School at the National University of Singapore (et al.) wanted to see if Chinese firms (I’d wager this isn’t just a Chinese phenomena) with sibling board members produced better results than peers without?
They do, and in ways that should be of especial interest to investors and analysts. In the study the researchers found where a company Chairperson has siblings on the board that firm:
- Had more patents than peers
- Had more citations to those patents i.e. those patents were of higher value
- Enjoyed greater innovation efficiency and quality of innovation, and..
- The effects of the above had a discernible economic effect up to four years into the future
In addition, it seems gender diversity among siblings is an additional plus as is having a family member as either the CEO or in charge of R+D.
The ‘why?’ of all this is harder to pin down although the paper offers some suggestions.
The important lesson for practitioners is that firms whose boards have siblings present, all things being equal, are likely to be more valuable over time than ones without. Which is very handy, indeed, to know.
You can access the work in full via this link Siblings on Boards – Good or Bad?
Happy Sunday.