Clan Culture And Corporate Financial Behavior ——Evidence From China's Private Listed Firms

Clan culture has an incomparable influence on China's social and economic development.In the last thousand years,China has been dominated by clan culture,while Europe has been dominated by city culture,and this cultural difference has led to the division of institutional systems between China and Europe.For a long time,the clan,as an important social platform for Chinese people,has not only promoted the formation of a specific market organization that affects economic activities,but also developed some social norms that have been passed down steadily.The change of cultural influence is especially slow.In modern society,clan culture connects individuals and enterprises by strong informal contracts.Unfortunately,the current researches on clan are mainly focused on the field of labor economics,and there are few empirical literatures related to the financial behavior of enterprises.This paper systematically constructs the theoretical framework of the influence of clan culture on corporate financial behavior,and establishes clan culture databases that include the macro cultural environment and micro individual cognition,which provides the basic support for empirical research.Specifically,this paper mainly discusses three aspects of corporate finance.The first is whether the clan culture can help Chinese private enterprises alleviate the financing constraints?The second is whether clan culture can influence the governance of private enterprises?Lastly,in the process of family business inheritance,what role does the founder's clan concept play in the inheritance decision?Based on the theoretical deduction and empirical analysis,the following conclusions are obtained:First of all,financing constraints is considered as an important factor that restricts the development of private enterprises in China.This paper finds that clan culture can be used as an alternative mechanism of formal financial system to help private enterprises obtain financial support and ease financing constraints.Specifically,in areas with strong clan culture,more clan members participate in the equity financing process,and enterprises can obtain higher commercial credit in the process of purchase and sales,and they are more willing to trade with clan members' enterprises,but financial support from formal financial institutions has not increased significantly.In addition,when entrepreneurs have an influential clan network or operate enterprises in the local area,the effect of clan culture is more obvious.Meanwhile,the large-scale population flow in the past three decades has also partially weakened the influence of clan culture.Finally,this paper also finds that the clan culture reduces financing cost of enterprises,which provides a new empirical evidence for understanding the rapid development of private enterprises under the condition of imperfect formal system.Secondly,based on the common recognition of the clan culture that "people who share the same surname have same ancestor",this paper finds that the chairman and the CEO share a surname is helpful to reduce the agency cost and improve corporate governance.Furthermore,when the genetic relationship between the chairman and the CEO is closer,the influence of same surname on agency cost is greater.Besides,if the chairman and the CEO's surname are not rare,or one of them is female,the role of the clan identity will no longer exist.Finally,this paper focuses on the important topic of family business inheritance,and finds that the founder's clan concept is an important factor for him to choose the successor.The stronger the founder's clan concept is,the more likely he will choose offspring as the successor.Furthermore,under the influence of the clan culture,the founders are more likely to choose the male offspring as the heirs.In addition,it is found that institutional investors,as well as a higher level of marketization,will weaken the influence of clan culture.Finally,founders with stronger clan concept are more likely to arrange their offspring to exercise in different positions in the enterprise before inheritance,and as a result,this kind of succession arrangement improves the market performance of the enterprise after inheritance.The field of financial economics is undergoing a cultural revolution.It is a hot spot to interpret the corporate financial behavior from a cultural perspective in recent years.For thousands of years,China has nurtured various traditional cultures,thus provided natural convenience for academic research.This paper focuses on clan culture in China,confirms the important role of clan culture in easing financing constraints,improving corporate governance and family business inheritance,and clarifies the black box of how clan culture influence corporate financial behavior.Overall,this paper is not only conducive to a comprehensive understanding of the development path of China's private enterprises,but also conducive to decision-making departments make economic promotion policies based on traditional culture,which can help the transformation and development of China's economy.