Intergenerational Change Of Power And Stock Price Changes

The family business around the world, has existed as an important socio-economic components, in various historical periods. The core of the family business is family. And the continuation of the enterprise is closely related to the family’s heritage. In the next decade, according to the forecast, the family business in China will usher in the peak of the second-generation successor. Family heritage has become a social concern.This paper studies the intergenerational transmission’s impact on the stock price, with event study methodology. This paper aims to study and analyze the intergenerational transmission of problem on the family business.The empirical results show that the second-generation succession led to the emergence of the cumulative abnormal returns. And the test showed that the cumulative abnormal returns are significant.The paper concludes that China’s second-generation family business succession belongs to the good news. This indicates that the family business "internal heritage" is also favorable.Therefore, the paper argues that the family business for its commitment to addressing the principal-agent problem, it is better to focus on the family, the second generation of culture.