scholarly journals Do Managers In Chinese Family Firms Learn From The Market? Evidence From Chinese Private Placement

2015 ◽  
Vol 31 (2) ◽  
pp. 471 ◽  
Author(s):  
Wanli Li ◽  
Weiwei Gao ◽  
Wei Sun
Keyword(s):  
Corporate Governance ◽  
Family Involvement ◽  
Family Firms ◽  
Independent Directors ◽  
Chinese Family ◽  
Family Control ◽  
Financing Decisions ◽  
Private Placement ◽  
Top Managers ◽  
Private Placements

Recent empirical papers report managers learning in merger and acquisition (M&A) decisions and family control is central in many countries. Does learning exist in family firms financing decisions? Based on the announced private placements from Chinese family firms, we investigate the relation between managers final decisions in family firms and the market reaction to the announcement. Our analysis suggests that a non-linear relation exists between managers learning and family control. Managers generally learn from the market when making final decisions but family involvement can reduce this probability. Supplementary testing indicates that managers in family firms with low ownership are less likely to learn from the market than those in family firms with high ownership. Further analysis suggests that corporate governance can influence managers learning. Family member participation in purchasing the placed shares and serve as the top managers can make manager learning less likely when the ownership is low. Independent directors in family firms dont play their due role in supervising the behavior of managers and large shareholders.

Family Firms and the Choice Between Wholly Owned Subsidiaries and Joint Ventures: A Transaction Costs Perspective

2018 ◽  
Vol 44 (2) ◽  
pp. 211-232 ◽  
Author(s):  
Maria Cristina Sestu ◽  
Antonio Majocchi
Keyword(s):  
Transaction Costs ◽  
Family Involvement ◽  
Family Firms ◽  
Joint Venture ◽  
Entry Modes ◽  
Family Control ◽  
The Family ◽  
Wholly Owned Subsidiary ◽  
Transaction Costs Economics

We examine the effects of family control on entry mode choice by integrating Transaction Costs Economics with the family business literature. Using a dataset of 951 foreign investments, we investigate the role of family involvement on entry modes. After controlling for endogeneity, we find that if both the investing and the local firm are family firms, forming a joint venture is preferred, while if only the investing firm is a family firm, a wholly owned subsidiary is more likely. Results show that family control has an important impact on entry modes, an hypothesis that has not yet been fully explored.

scholarly journals Family Control, Political Connection, and Corporate Green Governance

2020 ◽  
Vol 12 (17) ◽  
pp. 7068
Author(s):  
Xiaolin Li ◽  
Weian Li ◽  
Yaowei Zhang
Keyword(s):  
Family Firms ◽  
Chinese Family ◽  
The Political ◽  
Political Connection ◽  
Social Emotional ◽  
Family Control ◽  
Listed Firms ◽  
Individual Level ◽  
Green Governance ◽  
Governance Practice

This paper firstly introduces green governance into the empirical research of family firms. Due to the fact that family firms have their own particularity in the principal agent and also have a strong desire to preserve social emotional wealth, this paper deeply studies the driving influence of family control on the green governance of family firms, and analyzes the moderating effect based on the political connection of executives. Taking the 2015–2017 Chinese family-listed firms that released social responsibility reports as the research sample, we find that family control contributes to the improvement of corporate green governance in family firms. However, the political connection of the actual controller weakens the effect of family control on the green governance of family firms. In addition, this research is also carried out under different situations, such as at the regional level and individual level. The research helps family firms give full play to their own advantages, guide the green governance practice of family firms, and improve the level of green governance.

scholarly journals Market Feedback And Managers’ Decisions In Private Placement – Evidence From Chinese Family Firms

2016 ◽  
Vol 32 (4) ◽  
pp. 1049-1062
Author(s):  
Wanli Li ◽  
Weiwei Gao ◽  
Wei Sun
Keyword(s):  
Information Asymmetry ◽  
Family Firms ◽  
Family Members ◽  
External Factors ◽  
High Tech ◽  
Chinese Family ◽  
Control Rights ◽  
Private Placement ◽  
Market Feedback ◽  
The Relationship

What effect does market feedback have on managers’ decisions on private placement in family firms? Based on information asymmetry, agency theory, and corporate governance theory, we investigate the relationship between managers’ final decisions and market feedback to the announcement. We find that managers in family firms accept market feedback in decision-making and their attitude can be affected by many external factors. Managers tend to listen to the market when family firms are non-high-tech, when family members participate in purchasing the placed shares, when family members serve as managers, and when separation of control rights from ownership is small.

Effect of family control on corporate financing decisions of firms: evidence from Pakistan

2019 ◽  
Vol 37 (3) ◽  
pp. 155
Author(s):  
Imran Yousaf ◽  
Shoaib Ali ◽  
Arshad Hasan
Keyword(s):  
Family Firms ◽  
Univariate Analysis ◽  
Corporate Financing ◽  
Family Control ◽  
Financing Decisions ◽  
Panel Data Estimation ◽  
Tax Shield ◽  
Financial Characteristics ◽  
Relationship Of ◽  
The Impact

This study examines the effect of family control on corporate financing of the firms in Pakistan over the period 2005 to 2017. Moreover, this study also investigates, whether family control moderates the impact of firm specific factors on corporate financing of the firms. This study  is employed the GMM model for panel data estimation. The results of mean difference univariate analysis show that family firms are different from non-family firms based on different financial characteristics. Multivariate analysis results reveal that family control significantly impacts the corporate financing decisions of the firms. In addition, firm size, tangibility, profitability, non-debt tax shield, dividends and liquidity are found to be the important determinants of corporate financing decision of the firms. The moderation analysis reports that family control plays a significant moderating role between the relationship of firm’s characteristics (i.e. size, tangibility and probability) and debt ratios of the firms in Pakistan. These findings reveal useful insights for investors, banks, regulator and business families of the Pakistan.

scholarly journals Global institutions and local filtering: Introducing independent directors to Taiwanese corporate boards

2018 ◽  
Vol 33 (3) ◽  
pp. 292-314 ◽  
Author(s):  
Chi-Nien Chung ◽  
Young-Choon Kim
Keyword(s):  
Corporate Governance ◽  
Independent Directors ◽  
Corporate Boards ◽  
Family Control ◽  
Public Firms ◽  
Global Institutions ◽  
Family Governance ◽  
Geographic Context ◽  
Governance Model ◽  
Corporate Governance Practice

Drawing on the idea of selective interaction between organizations and environments, the authors examine how organizations change their traditional practices when they are exposed to new institutional environments. In the context of corporate governance change in response to financial market globalization, they argue that global institutional influence is moderated by local corporate control contexts that function as filtering mechanisms. The authors empirically analyse the adoption of a new corporate governance practice, i.e., the initial introduction of independent directors, in Taiwanese public firms, where family governance has been a dominant governance model. The findings suggest that while firms exposed to US capital markets are more likely to adopt independent directors, this facilitating effect weakens when the firms are under strong family control and is amplified when they are unbound from local frameworks through the key leader’s education or their geographic context.

Do family CEOs benefit investment efficiency when they face uncertainty?

2017 ◽  
Vol 11 (2) ◽  
pp. 248-269 ◽  
Author(s):  
Weiwei Gao ◽  
Wanli Li ◽  
Zhen Huang
Keyword(s):  
Ownership Structure ◽  
Family Firms ◽  
Generation Effect ◽  
Chinese Family ◽  
Family Ownership ◽  
Investment Efficiency ◽  
Content Type ◽  
Family Control ◽  
Large Shareholder ◽  
Shareholder Structure

Purpose This paper aims to investigate whether family CEOs benefit investment efficiency under uncertainty with Chinese family firms and to test the moderating effect of ownership structure, including family ownership, the separation of family control from family ownership and the multiple large shareholder structure. Design/methodology/approach Fixed-effects models are designed for a sample of 5,734 firm-year observations for Chinese family firms from 2009 to 2014. Findings The results show that investment efficiency is low under uncertainty, and having family CEOs can reduce this negative relationship. Further analysis reveals that for firms with family CEOs, the negative effect of uncertainty on investment efficiency is weaker when the family has higher ownership, when family control is less separated from family ownership, or when family firms have multiple large shareholder structures. Research limitations/implications The authors do not distinguish founder-CEOs and descendant-CEOs. Most of Chinese family firms are still managed by founders, so the authors cannot explore the generation effect although different generations manage firms differently. Because family succession is becoming a more and more important problem in China, further research may be able to explore the generation effect. Practical/implications This paper suggests that in emerging economies with weak investor protection, outside minority shareholders can avoid expropriation from family owners by investing in firms with large family ownership, little separation of family control from ownership or multiple large shareholder structure. In addition, policymakers can encourage institutional investors to participate in family business to improve corporate governance. Originality/value Drawing on both Type I and Type II agency theory perspectives, the authors argue that although family CEOs can generally benefit firms’ investment efficiency, the benefits vary with firms’ ownership structure. In other words, family CEOs are not absolute agents or stewards but some extent of combination of both.

The Value of Outside Directors: Evidence from Corporate Governance Reform in Korea

2007 ◽  
Vol 42 (4) ◽  
pp. 941-962 ◽  
Author(s):  
Jongmoo Jay Choi ◽  
Sae Woon Park ◽  
Sean Sehyun Yoo
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Asian Financial Crisis ◽  
Independent Directors ◽  
Board Composition ◽  
Governance Reform ◽  
Outside Directors ◽  
Family Control ◽  
Indigenous Institutions ◽  
Corporate Governance Reform

AbstractThis paper examines the valuation impacts of outside independent directors in Korea, where a regulation requiring outside directors was instituted after the Asian financial crisis. In contrast to studies of U.S. firms, the effects of independent directors on firm performance are strongly positive. Foreigners also have positive impacts. The effects of indigenous institutions such as chaebol or family control are insignificant or negative. This implies that the effect of outsiders depends on board composition as well as the nature of the market in which the firm operates.

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