Directorate Governance, Information Transparency And Family Firm Value

Because the new problem "one share big alone" and family=control in family business, the principal-agent relationship and govemance pattern are different between family and non-family business.With the development of Chinese capital market,the number of family-owned listed company increased rapidly in recent years.Based on the "dual-agency problem" of family business,this paper selects 110 family-owned listed companies in Shanghai and Shenzhen stock exchanges in 2003-2007 as the samples,and studies the relationship between the directorate governance,information transparency and family firm value from internal and external governance two aspects.As theoretical analysis we find that:the agency conflict between family-controlled majority stockholders and spacious minority stockholders is dominating agency problem in family-owned listed companies,and the "family altruism" does not offsets but increases agency cost of the family company.So the core of corporate governance in family-owned listed company is how to protect the minority stockholders from being exploited and violated by the family majority stockholders.As the core of internal governance, directorate governance and information transparency which is the base of external governance all can realize this purpose and improve firm value.The result of demonstrate study shows that:the board's structure,director's behavior and capability,stimulation level all can influence firm value.In respect to board's structure: There exist positive correlation between firm value and setting directorate specialty committee;negative correlation between firm value and board scale,separation of the chairman and general manager;but an inverted U-shaped relationship between firm value and the ratio of family- director.In respect to director's behavior and capability:There exist positive correlation between firm value and the ratio of industrial & professional director,the number of board conference and the ratio of independent director dimission; the higher the proportion of director's absence for board conference,the lower firm value would be.In respect to stimulation level:There exist negative correlation between firm value and family- director' share ratio;positive correlation between firm value and independent director' salary.In addition,the demonstrate study finds that there exist negative correlation between firm value and the information disclosure evaluation,analysts follow of current year and forecast error.But forecast error is not significant.This result indicates that the higher the information transparency of Chinese family-owned listed companies,the lower firm value would be. This paper try to give some proposals based on the above results of theoretical analysis and demonstrate study.It is necessary to perfect the directorate governance and information disclosure institution for Chinese family-owned listed companies,at the same time increase the independence of the board and the quality of the director,improve independent director' incentive and restraint mechanisms.Further more we suggest perfecting the institution of board meeting and legal system of protecting minority shareholders ' benefit,establishing an information disclosure institution with reasonable structure and more essential than formal,in order to promote the development of our family-owned listed company incessantly and healthily.