scholarly journals Governance Structure and Related Party Loan Guarantees: The Case of Chinese Family Business Groups

2015 ◽  
Vol 11 (4) ◽  
pp. 599-619 ◽  
Author(s):  
Xin Chen ◽  
Jakob Arnoldi ◽  
Chaohong Na
Keyword(s):  
Family Business ◽  
Business Groups ◽  
Institutional Development ◽  
Governance Structure ◽  
Chinese Family ◽  
Senior Executives ◽  
Minority Shareholders ◽  
Family Governance ◽  
Family Business Groups ◽  
Loan Guarantees

ABSTRACTLoan guarantees to related parties by affiliated subsidiaries within family controlled pyramids form a means by which the controlling family expropriates value from minority shareholders. The controlling family, however, will attempt to escape blame for the behavior. Using a sample of 1785 listed Chinese firms affiliated with family-controlled business groups, we explore how family governance structure affects the use of related party loan guarantees. As hypothesized, we find that affiliates with non-family chairmen, but with family directors or senior executives, issue larger volumes of loan guarantees to related parties, whereas affiliates with family chairmen and those with non-family interlocking chairmen do not. The behavior is moderated by regional institutional development.

scholarly journals The determinants of the succession in Taiwan’s family business groups

2008 ◽  
Vol 5 (4) ◽  
pp. 427-436
Author(s):  
Hsi-Mei Chung ◽  
Yunshi Liu
Keyword(s):  
Family Business ◽  
Group Performance ◽  
Panel Data Analysis ◽  
Business Groups ◽  
Chinese Family ◽  
The Family ◽  
Family Business Groups ◽  
Family Business Group ◽  
Succession In Family Business ◽  
Leader Change

Based on the panel data analysis of Taiwan’s family business groups from 1988 to 2002, this research attempts to investigate the relationships among overlapping investment, use of particularistic ties, group performance, and succession in family business group. The results show that the family business group’s overlapping investment between the owner-managers and family members occupying the decisive positions of group affiliates significantly influence its leader change. This study highlights the importance of alternative control choices within the family business. Furthermore, it also provides a good comparing start-point for researches interested in understanding the succession issue of Chinese family business in Great China

Family Business Groups around the World: Financing Advantages, Control Motivations, and Organizational Choices

2011 ◽  
Vol 24 (11) ◽  
pp. 3556-3600 ◽  
Author(s):  
Ronald W. Masulis ◽  
Peter Kien Pham ◽  
Jason Zein
Keyword(s):  
Family Business ◽  
Business Groups ◽  
The World ◽  
Family Business Groups

Auditor Appointment Strategy and Intragroup Value Transfers: Evidence From Family Business Groups

2021 ◽  
pp. 0148558X2199265
Author(s):  
Yan-Leung Cheung ◽  
In-Mu Haw ◽  
Weiqiang Tan ◽  
Wenming Wang
Keyword(s):  
Adverse Effect ◽  
Financial Reporting ◽  
Family Business ◽  
Business Groups ◽  
Divide And Conquer ◽  
Alternative Measure ◽  
Family Business Groups ◽  
Audit Effectiveness ◽  
Financial Reporting Comparability

Family business groups (FBGs) typically control several member firms and can hire a single auditor or multiple auditors to audit their member firms. This article examines what type of auditor appointment strategy constrains intragroup value transfers within FBGs. Analyzing related-party transactions (RPTs) within FBGs in Hong Kong, this study provides evidence that FBGs with multiple auditors undertake more intragroup value transfers than FBGs with a single auditor. However, the adverse effect of multiple-auditor appointments is mitigated by a stronger board and higher financial reporting comparability among member firms. Using an alternative measure of intragroup value transfers, we also find that the market perceives multiple-auditor appointments as impairing audit effectiveness. Overall, our findings offer the new insight that controlling families can exploit the appointment of multiple auditors as a “divide and conquer” strategy which undermines the monitoring role of auditors against intragroup value transfers, but stronger corporate governance of member firms can mitigate the adverse effect.

scholarly journals The Dynamics and Complexity of Family Business Groups

2018 ◽  
pp. 177-200 ◽  
Author(s):  
Kajari Mukherjee ◽  
Marita Rautiainen ◽  
Timo Pihkala ◽  
Peter Rosa
Keyword(s):  
Family Business ◽  
Business Groups ◽  
Family Business Groups

A Far-Reaching Parental Love? Co-Governance of Intergenerational Succession and Innovation Activities in Chinese Family Firms

2021 ◽  
pp. 1-37
Author(s):  
Zhenduo Zhu ◽  
Yuanfei Kang
Keyword(s):  
Family Relationships ◽  
Family Firms ◽  
Governance Structure ◽  
Chinese Family ◽  
Age Difference ◽  
Family Governance ◽  
Innovation Activities ◽  
Parental Love ◽  
And Gender ◽  
Intra Family

ABSTRACT Motivated by the research gap on intergenerational succession dynamics of family firms, this study examines the effects of initiating intergenerational succession on firms' innovation activities. We propose that initiation of intra-family succession can result in founder–successor co-governance that represents a strategic transition to the succession and incorporates the two conflicting yet complementary directions of change and continuity. Grounded in the theory of altruism, we suggest that co-governance will positively affect firms' innovation activities and that this positive link is contingent on the idiosyncratic intra-family relationships of kinship type, age difference, and gender difference between the founder and the successor. Furthermore, we posit that co-governance will lead to a flow of resources to low risk, rather than more inventive but higher risk, innovations. Based on the unbalanced panel data of 4,694 firm-year observations in our sample from listed Chinese family firms during the 2006–2015 period, empirical analysis supports our hypotheses and confirms that when examining family firms' innovation, there is a need to take the heterogeneity of the intra-family governance structure more fully into consideration.

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