Abstract
Purpose: The study examines the effects of family ownership on investment inefficiency, and influence of gender diverse board on this relationship in context of an emerging economy.
Design/Methodology/Approach: Using sample of non-financial firms listed on Pakistan Stock Exchange, we employed 2954 firm-year observations over the period 2012-2021. We used ordinary least squares regression method to test the hypotheses and further employed system generalized method of moments and fixed effects analysis to check for the endogeneity issue.
Findings: Using the lens of social identity theory and agency theory, we found that investment inefficiency is lesser in family owned firms. Moreover, presence of female directors on boards further reduces the investment inefficiency in family firms.
Originality: The study provides empirical evidence of family owners behavior on investment decisions in family-owned firms. Overall, our results extend empirical support to social identity theory and agency theory in an emerging market context.