Corporate Governance In The Transformation Period Of Family Business

“The Chinese modern family business report” released in September,2014 clearly has shown that family business plays an extremely important role in domestic private business,which significantly contributed to national economy during increasing stably development period.The report also reveals that a large amount of family businesses have faced multiple challenges,such as industrial structure adjustment,growth speed drop and family inheritance etc.in the transformation period.In addition,family businesses' limitations gradually arose when overcoming these difficulties.The failure to realize the sustainable development is a common failing for domestic family business,which results from the relatively backward governance pattern.Helping family businesses in the transformation period to overcome all sorts of challenges favorably and achieve sustainable development has currently become a conundrum for domestic family business.The research on corporate governance of family business in the transformation period has a far-reaching influence on the sustainable development of domestic family businesses.Firstly,this thesis summarizes domestic and foreign literatures on the demarcation of family business,the transformation of family business and the governance of family business.In consideration of no consensus reached among domestic and foreign scholars regarding the demarcation of family business,this thesis holds that family business by drawing ideas from researches on the demarcation of family business,is an enterprise with following characteristics:(1)The ownership of enterprise(more than 15%)is held by a family or partnership family.(2)Family members have a strategic impact on enterprise development through participating in enterprise management and corporate governance etc.(3)The rights of enterprise can be legally continued by family members.Secondly,this thesis analyzes the particularity of corporate governance of family business in 3 different stages: family governance,hybrid governance and modern governance,and then analyzes specific requirements of family governance-hybrid governance transformation and hybrid governance-modern governance transformation.This thesis combines evolutionary theory,principal-agent theory and property right theory with theoretical model of family business to analyze a case of ZGF Company.This case includes 3 parts of introduction,analysis and conclusion.The introduction tells base situation of ZGF Company and its corporate governance in the transformation period.And the analysis relates to the success or failure of corporate governance in the transformation period of ZGF Company.Finally,some suggestions recommended for the governance of family business in the transformation period from concluding the case study of ZGF Company.From family governance stage to hybrid governance stage,the governance of family business can take the following measures:(1)Rational use of the advantages of paternalistic leadership;(2)Strive for the diversity of equities;(3)Consummated employment mechanism of family business.From hybrid governance stage to modern governance stage,the governance of family business can take the following measures:(1)Establishing family members' withdrawal mechanism;(2)Improving check-and-balance system;(3)Strengthen the contractual governance of family relationship.This thesis hopes to provide a reference for domestic family business corporate governance by the case study of ZGF Company.This thesis mainly adopts a method of normative research combined with case study research.Evolutionary theory,principal-agent theory,property right theory and theoretical model of family business are applied to make a causal analysis of the success or failure of corporate governance in the transformation period of ZGF Company,which brings some suggestions to the governance of family business in different transformation periods.In transformation periods,a variety of problems will frequently occur in the governance of family business.In terms of different stages,there are different requirements and problems in the governance of family business.The primary innovation in this thesis is the causal analysis of the success or failure of corporate governance in the transformation period of ZGF Company,which provides a reference for the corporate governance of domestic family business.Because of the limited time,space,and the author's professional knowledge,some arguments and some measures are not that perfect in this thesis.After that,the case company referred here is not a quoted company,and some corresponding information of corporate governance were not published.To collect this case company's information is a difficult job.Therefore,the difficulty to use a large sample of empirical research results from the description and qualitative analysis for this thesis.As a consequence,the method of the combination of normative research and case study are applied to do a research,with an impact on the depth and breadth of the case.How to collect more data,using a large sample of empirical research to support the qualitative analysis,will be my future study and research direction.