The Impact of Goal Alignment on Board Existence and Top Management Team Composition: Evidence from Family‐Influenced Businesses*

Using a sample of 714 private family influenced businesses in Germany, we investigate the relationship of goal alignment between owners and managers and the existence of a board of directors. Agency theory and stewardship theory serve as theoretical bases for our study. We find that firms with relatively high levels of goal alignment are less likely to have a board of directors. Our results provide support for the substitution hypothesis of formal by social control mechanisms. Furthermore, the findings show that firms without a board and with relatively low levels of goal alignment have less family members in the top management team. This circumstance might in turn be a trigger for owners to install a board.