When Governance Matters: Board Quality, Family Control, and Firm Performance in Times of Crisis

This study examines whether board quality moderates the impact of an exogenous shock on the financial performance of family firms. Using a panel of 83 Mexican listed companies over the period 2014–2023, the study analyzes firm performance during the COVID-19 crisis, focusing on the role of board institutional quality measured through an index capturing board independence, non-executive representation, CEO-chair separation, and gender diversity. Employing firm fixed-effects models with robust standard errors and two alternative performance measures (ROA and ROE), the study tests whether family ownership, board quality, and their interaction shape firms’ ability to withstand the shock. The results show that, while family control per se does not generate a differential performance effect during the pandemic, leverage exerts a strong and robust negative impact. Board quality displays a positive and marginally significant association with return on equity, suggesting that governance structures may play a more relevant role in protecting shareholder returns than in improving asset efficiency during crisis periods. Overall, the findings highlight the contingent nature of the family firm advantage and underscore the importance of capital structure and board institutional quality in explaining firm performance under conditions of extreme uncertainty.