Family Control And Business Performance In Family Holding Listed Firms

As an ancient form of enterprise organization, family business plays an important role and becomes one of the most widely used enterprise organization in the global economic. Studies show that the quantity of family-owned or family-operated firms account for 60%-80% of the total global enterprises. And compared with non-family businesses, family firms show stronger vitality. Family enterprises'rapid development in global economic and the important function they are playing makes some scholars realize that the family management has advantages that have been ignored before, and they manage to make a lot of research on this area. In the 1990's, research on family business come into a boom, and a large number of important results have been gained. Be similar to the international development trend of family business, Chinese family business plays an increasingly important role in China's economic. However, Chinese academic studies about the family business began just in the beginning of this century, much later than international studies. In 2001, Tiantonggufen and some other family firms went to public for the first time and this really opened up the study of Chinese family businesses boom, but the research is limited to subjective judgments, few empirical research has been done. To solve this problem, this paper makes an empirical test and analysis about the relationship between family management and business performance and hopes can do some contribution to the current research.On the base of current research, this paper points out that family business also exists agency problems, but agency problems in listed companies showed different characteristics because of family's participation and control. Drawing on the clue of agent problem, this essay attempts to test the ultimate impact on business performance which imposed by family participation. After in-depth analysis of the characteristics of family businesses, this paper filters out three categories of factors that affect the performance of family businesses:the degree of participation into business management of a holding family, the control right holding family owns in the enterprise and balance power from other stakeholders. According to the existing literature, this paper assumes that:family participation and control can alleviate agency conflict because of its own characteristics and the current external conditions so as to enhance enterprise performance. However, just like any other enterprise organization, family firms also have some limitations. To play a positive role, balance power in famiiy business is needed which can ensure that holding family acts along the overall interest of the business. According to this logic, this paper presents five hypotheses.In order to test these hypotheses, this dissertation selects family firms listed in Shanghai Stock Exchange and Shenzhen Stock Exchange which list from 2006 to 2008 and only issue A shares. According to defined criteria, the dissertation selected carefully in the listed firms and finally filtered 160 samples, in which 87 samples from Shenzhen Stock Exchange, and 73 samples from Shenzhen Stock Exchange. Using 480 observation data, the dissertation makes a regression testing and analysis for the established model. Empirical results show that:the proportion of family executives and ROE appears inverted "U"-type relationship; in the current circumstances, directors hold the position of general manager help improve business performance; cash flow rights, control right possessed by holding family and business performance indicators were positively related, the separation ratio of cash flow rights and control right was negatively correlated with firm performance; equity balance is conducive to family business performance improvement. Finally, according to the empirical findings, the dissertation gives recommendations to enhance the performance of listed family firms.