**5. Conclusions**

In this paper, we sought to compare the performance difference between family and non-family firms in the Japanese manufacturing industry from the perspective of corporate governance utilizing data of 1412 companies over the period 2014–2018. The sample size consisted of 861 non-family firms and 551 family firms. We investigated how the two mainsprings of corporate governance, namely ownership structure and board structure, influence the firm performance measured by ROA and Tobin's Q.

Our univariate analysis indicated that both family and non-family firms differ significantly in terms of ownership structure, board structure, and firm performance. We found that family firms outperformed non-family firms in terms of the mean values of ROA and Tobin's Q when the univariate analysis was invoked. Furthermore, the mean and median comparison tests (*t*-test and *z*-test) yield that family firms have higher performance than non-family firms with Tobin's Q, in particular. We note that this may happen because family firms' top priority is to seek sustainable growth as they want to pass their wealth to future generations, not on pleasing their shareholders in the short term (ROA).

For ownership structure, family firms are found to be less diversified than non-family firms, indicated by the lower percentage of the institution, government, and foreign shareholding, and less transparent in terms of having higher family ownership concentration. In terms of board structure, family firms have a small board size, fewer board meetings, and fewer independent directors on the board than non-family firms. The lower value of board-related characteristics does not necessarily indicate that the board of family firms is worse than that of non-family firms. It is likely due to the difference in size, the company's organizational structure, and the complexity of the firm's business.

Our multivariate analysis shows that family ownership has a significant positive impact on Tobin's Q. However, family ownership negates firm performance when ROA is taken into account. We note that this may happen because the management of family firms is more interested in improving the long-term growth of the firm, not to increase the short-term gain to please their shareholders.

Regarding the effects of governance elements on firm performance, we found that institutional shareholding appears to be a significant and positive factor for promoting the performance of both family and non-family firms as far as Tobin's Q is concerned. Moreover, board size encourages the performance of non-family firms, while such influence was not observed for family firms. In terms of ROA, foreign ownership inspires the performance of both family and non-family firms. However, the effect of foreign ownership was more noticeable for family firms, indicating that family firms can benefit more from foreign investors as they can bring in more radical changes to the firms. Furthermore, government ownership stimulates the performance of family firms up to a certain threshold level, while board independence significantly negates the same. Besides, we found that the performance of family firms run by the founder's descendants is superior to that of family firms run by the founder. As a whole, the study confirms previous findings that family firms outperform non-family firms in

the Japanese context using Tobin's Q and ROA measures. Simultaneously, the study outlines some governance factors that are instrumental in improving firm performance and policymaking as well.

However, this study is not free from certain limitations. We only studied governance variables available with Bloomberg. The inclusion of more governance factors with a longer time may hurt our results. Moreover, we did not investigate the management strategies adopted by different types of family firms, which might have an impact on the performance difference between firms. Moreover, a study on the link between corporate social responsibility and performance of different types of family firms in Japan may add value to the literature of family firms.

**Author Contributions:** Data curation, L.T.; Funding acquisition, K.K.; Investigation, L.T.; Methodology, B.K.A.; Project administration, K.K.; Writing—original draft, B.K.A.; Writing—review & editing, K.K. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research received no external funding.

**Acknowledgments:** This study is the outcome of JSPS Grant-in-Aid No. 18H00901, Type B, received from the Ministry of Education, Culture, Sports, Science and Technology, Japan for the financial year 2018–2020 to research "Governance and Performance of Family Firms and Non-Family Firms in Japan-A Comparative Study".

**Conflicts of Interest:** The authors declare no conflict of interest.
