A Study on the Relationship between Power Configuration of Listed Family Firms and Their Performance
|School||Zhejiang University of Finance|
|Keywords||family firm power configuration firm performance kinship|
Since the modern corporate system has been praised highly, family firm had beenconsidered a company organization form of backward, inefficient and dying for a longtime. But the excellence in the global economy and the growing economic impacts offamily business was very different from the judgment before, which made scholars hadbegun to re-examine the family business. Since then, study of family business has beenin full swing and the control is one of the focuses of scholars.Most of the previous research on family business based on the assumption that allfamily agents are homogeneous and hold same values, which shows its limitation inexplaining the relationship between family governance and firm performance. Thispaper breaks the traditional assumption. It holds that different family members havetheir different preferences and abilities, so empowerment of different familymembers will have a different impact on business performance. In addition, differentkinships have different influences in reconciling contradictions between familymembers. So this paper focus on power arrangement among family agents, in-depthstudy of the impact of absolute power, concentration and symmetry of power of familymembers on corporate performance, as well as influence of kinship in powerconfiguration mode.This paper selects121samples of Shanghai and Shenzhen A-share listed familyfirms between2009and2011, carries out the related description between variables andpanel regression analysis. The following conclusions are draw:(1) the existence ofexternal large shareholders is good for family business performance, they havesignificantly positive correlation; the whole family shareholding ratio has an invertedU-shaped, rather than linear, relationship with firm performance; the family overallmanagement right and firm performance is negatively correlated;(2) the ownershipconcentration among family members and enterprise performance is negatively related;the management power concentration among family members has an inverted U-shaped,rather than linear, relationship with enterprise performance;(3) Family agents’ votingrights and management rights are not perfectly symmetrical, which has a significantlynegative impact on family business performance;(4) relative voting rights of nuclearfamily and firm performance was positively U-shaped, while relative managementrights of nuclear family and firm performance was positively inverted U-shaped;(5) separation degree of ownership and management rights of nuclear family doesn’t affectfirm performance much, while the separation of non-nuclear family has a significantlynegative impact on firm performance.The innovation of this paper is considering the variability of individual familymembers and taking in the regulation of genetic relationship. The results of this studyhave theoretical significance, as well as empirical significance. On one hand, it providesa useful reference for the study of the unique family business governance advantages;on the other hand, it provides practical guidance on how to perfect internal governancemechanism of our family business, which is conducive to the further development andgrowth of our family firms.