Negative Effect of Family Ownership on Firm Value and Roles of Audit Committee: A Focus on in an Asian Emerging Market

An audit committee exerts a crucial influence in the modern corporate governance system of publicly listed companies, and it helps ensure a fair distribution of rights and benefits among relevant firm stakeholders. This study raises inquiries about the potential moderating influence of favorable audit committee attributes on the relationship between family ownership and firm value, particularly in light of evidence indicating adverse impacts of family ownership on firm value. A research inquiry is addressed using a hierarchical regression analysis, and data spanning twelve years, from 2011 to 2022, on companies listed in the Stock Exchange of Thailand, are gathered and tested. The statistical analysis outcome substantiates the adverse impact of family ownership on firm valuation within the Thai stock market. However, a robustly independent audit committee coupled with frequent meetings leads to the reverse effect of the negative impact of family-owned firms on firm value. Significantly, this study highlights that only the firms with a high proportion of family shareholders tend to destroy the firm's value. Either audit committee independence or meeting frequency has a marginal effect in protecting firm value from the influence of family ownership. Interaction of more frequent meetings of the audit committees with more audit committee independence of the board is a highlighted mechanism to serve as an effective deterrent against the harmful influence of family members acting as controlling shareholders.