Legitimacy Of Family Listed Company's Heir-Senior Management Team Reorganization And Corporate Performance

With the coming of the 40 th anniversary of reform and opening,China's first generation of private entrepreneurs also reach retirement age.Internal inheritance is still the most popular choose for family enterprise which facing inheritance situation.So the family business intergenerational inheritance question is getting more and more attention from the theoretic and industry.This paper finds that the previous researches mainly focused on the influence of inheritance's form on the inheritance results and ignored the role of inheritor's characteristics.So based on the theory of Power Cycle Theory and Upper Echelon Theory,this paper proposed a theoretical framework to analysis family business successor legitimacy and the inheritance results.Through the traditional theory of authority to defines the two sources of legality of the heir.There are institutional legitimacy and strategy legitimacy.Then using the A-share listed companies' data from Shanghai and Shenzhen exchanges in 2001-2015 for empirical research.The results show that the legitimacy of the succession of family enterprises has a significant positive influence on corporate performance.In terms of concrete mechanism,this paper found that heir's strategy legitimacy significantly negative influence on the reorganization of the company's senior management team,and the reorganization of the senior management team will be a negative impact on corporate performance.Finally this paper proves that reorganization of the senior management team has total intermediary effect for the relationship between the heir's strategic legitimate and corporate performance after succession.According to the research conclusion and successful cases of family business intergenerational inheritance,this paper suggested that family enterprise shall establish a succession plan as soon as possible,the longer the intergenerational inheritance run-up,more to improve family enterprise heir legitimacy,which can guarantee the stability of the succession and the company performance.At the same time,we should pay attention to the building a suitable senior management team for family business successor,which can avoid a huge reorganization of senior management team.