Family Firm Succession And Investment Behavior

Choosing the A-share listed family enterprise in China during 2004-2015 as a study sample,we defined the second generation took over the firm's CEO as the point for family firm succession,and the period of inheritance was between the five years ago and two years after when the second generation took over the CEO,including the preparation stage and succession stage.Empirical studied the changes of the investment behavior in the inheritance period of the family frim,by comparing the different events between the second generation and other members who took over the CEO.We selected the investment scale and investment structure as a new angle of view and explored the internal relation between investment behavior and inheritance.We have found that the corporates' investment behavior had changed when the second generation took over the CEO during the period inheritance.From the perspective of investment scale,the investment scale had increased in preparation stage,but decreased in succession stage for the specific performance.However,the investment scale had no significantly changed when the other people as the CEO.Considering the long-term investment had positive incentive effect for the family firm,it was possible that the found of firm increased the investment scale in preparation stage in order to help the second generation smooth succession.From the perspective of investment structure,there was no obviously changed in preparation stage when the second generation took over CEO.But in the succession stage,the local investment proportion had increased while the foreign investment proportion had decreased,which was supported the declined scale in succession stage.It showed that the family firm was inclined to adjust the investment structure for the purpose of avoiding risk during the inheritance stage.From the inter-temporal changes of the investment behavior for the period of succession,we thought the investment expansion before succession should be the gen generation entrepreneurs' arrangement to avoid family wealth dissipation.Therefore,we focused on the investment expansion in preparation stage and analyzed the influence in detail from the personal characteristics of executives(social relations),enterprise characteristic(debt structure)and characteristics of industry(industry cycle).We have found that the investment expansion would be no obvious if the family firm had more social relation sources or more liability with interest,but the investment expansion would be more significantly if industry was in good station.After a further examination,we have found that the investment expansion in preparation stage could improvement the family firms' performance.First,it can improvement the performance of ROE or the profit growth rate.Second,it can boost the investor's confidence.The research shows that the inter-temporal changes of the investment behavior during the period of inheritance should be the gen generation entrepreneurs' arrangement.We selected a new angle of view and analyzed the special meaning of investment behavior during the succession,which enriched the research of family firm succession and investment behavior.