Research On Family Business Agency Cost Under The Control Of Social Capital

As the core issue to be solved by corporate governance,the agency problem has long been paid attention by the academic community.Before the outbreak of the Asian financial crisis in 1997,when scholars studied corporate governance issues,they mainly focused on how to solve the agency costs incurred by shareholders and managers due to agency conflicts under the condition of highly dispersed ownership and management rights.However,after the Asian financial crisis in 1997,the scholars' research focuses on how to solve the problem of how to solve the agency costs between shareholders and operators and how to solve the agency costs between ultimate shareholders and minority shareholders.Su Qilin pointed out that when an enterprise's ownership and management rights are highly concentrated in one family,the family members will use this right to squeeze the interests of minority shareholders so as to maximize their family benefits.Scholars have also confirmed the prevalence and severity of the phenomenon of ultimate shareholder proxies in family firms through empirical research.Therefore,the problem of governance in the face of the high concentration of ownership and management of enterprises becomes urgent.Based on the perspective of social capital,this paper focuses on the influence of the ultimate shareholders controlling the enterprises in the governance of family-owned enterprises on the two types of agency costs.Through further research on controlling the ultimate shareholders' social capital in family-owned enterprises,a quantitative model of the control strength of social capital is constructed and the quantitative indicators of the non-contractual agency costs of family-owned enterprises are innovated.It has important theoretical and practical significance to further explain the issue of ultimate shareholder control in family business governance.Its theoretical significance is,first,to improve the research perspective.Most of the previous studies are based on the traditional principal-agent theory to explore the conflict between shareholders and management of agency costs caused by the first type of agency costs,while ignoring the reality of most enterprises face more serious agency problem is in fact the second type of agency problem caused by the conflict between the agent of the ultimate shareholder and the minority shareholder.This article will try to study the second type of agency costs in-depth,to explore the second type of agency cost measurement methods to further improve the research of double agency costs.Second,a quantitative model of controlling the intensity of social capital is constructed.At first,social capital is the core concept in the field of sociology and is mainly used to study the basic communication characteristics of different social groups' networks and interpersonal relationships.However,due to the hidden nature and importance of the social capital of the family business,social capital has to be taken into consideration in the research of family business governance.The contribution of this article lies in the predecessors put forward the concept of social capital control and its initial exploration of the framework of innovative methods of social capital measurement and promote the social capital for the empirical study of family-owned or even non-family-owned corporate governance process.Its practical significance lies in that from the reform and practice of the family business governance in our country,it can be seen that the family business in our country is in the bottleneck of growth and development.The relaxation of listing conditions ignites the hope of family business development.How to make this hopeful fire a fire-retardant rather than a catastrophe for strengthening the economic development in our country? The primary problem to be solved is how to avoid the first-type agency costs and the second-type agency costs caused by the ultimate shareholders' control.Therefore,it is far-reaching practical significance to explore how the ultimate shareholders in the family business governance can make use of the social capital to control the listed companies and how to deprive the minority shareholders of their interests from playing an important role in the innovation of corporate governance in our country.The first part of this article is an introduction.First introduce the research background and significance.The background mainly focuses on the rapid development of family-owned enterprises and the academic research on the management of family-owned enterprises.It also points out the agency problems that family-owned enterprises face and the starting point of this paper.Then introduce the theoretical and practical significance of the research results of this article to society.Secondly,it clearly introduces the research goal of this paper.The goal of this paper is to explore the relationship between the controlling strength of the ultimate shareholders of family-owned enterprises and the cost of the two types of agency,and to find the evidence that the ultimate shareholder encroaches on the interests of small and medium shareholders through empirical research,so as to arouse the attention of government departments to accelerate legal innovation,as well as to improve theoretical research.Finally,it briefly introduces the innovations of the research methods and research contents used in the dissertation,and paves the way for the following chapters.The second part is conceptual definition and literature review.It is divided into two parts: the first part is to define the related concepts,including the definitions of family-owned enterprises,ultimate shareholders control and social capital control;the second part is a literature review,which summarizes and reviews the present situation of the related theoretical research on the agency costs of the family business,the ultimate shareholder control and the agency costs of the family business,discusses the root causes of the ultimate shareholder control in the family business governance,points out the existing literature research results and deficiencies,and further put forward the entry point of this study.The third part is the theoretical basis and research hypothesis.First of all,the paper discusses the basic theory involved,including principal-agent theory,stewardship theory,altruism,resource-based theory and social capital theory.Then based on the basic theory of each point of view and the current scholars' research results,this paper put forward four hypotheses,the specific assumptions are as follows:(1)In the family business,the greater the control power of the ultimate shareholder in using social capital,the lower the agency costs between shareholders and managers;(2)In the family business,the greater the controlling strength of the ultimate shareholders in using social capital,the higher the agency costs between the ultimate shareholders and the minority shareholders;(3)In the family business under the professional management mode,the greater the controlling strength of the ultimate shareholder in using social capital,the higher the agency cost between the shareholder and the manager;(4)In the family business under the professional management mode,the greater the controlling strength of the ultimate shareholder in using social capital,the lower the agency costs between ultimate shareholders and minority shareholders.The fourth part is empirical analysis.This part starts with an introduction of the sample selection rules and data sources,next the variables determination and its detailed explanation of the reasons.The explained variables include contract agency costs and non-contract agency costs,which are respectively measured by the management expense ratio and the price to book ratio;explanatory variable is the strength of social capital control,introduced how to quantify the strength of social capital control ideas.Then according to the research hypotheses proposed in Chapter 3,the verification model is designed,and the linear regression function is constructed for hypotheses 1 and 2,respectively.For hypotheses 3 and 4,this article uses a grouped regression method and compares the correlation coefficient changes among groups to the verify the intermediate regulatory role of the management model between the strength of capital control and agency costs,rather than the method of interactive term coefficient.Among them,the management model as a group variable,the sample is divided into family management and professional management models of two groups,and then use the model 1 and 2,respectively,before and after the group regression coefficients were compared to obtain the experimental results.Finally,using SPSS.21 statistical software to analyze the relationship between social capital control and agency costs of the ultimate shareholders of listed family enterprises,and then draw the relationship between them and consider the influence of management mode on the relationship between the two.The fifth part is the conclusion and suggestion.According to the results of data analysis,this paper explains the root causes of the relationship between social capital control and the two costs in the empirical results from the theoretical and practical perspectives,and puts forward suggestions on alleviating the problem of family business agency.The suggestions are mainly put forward from the point of legal formulation and social supervision:(1)Perfecting the legal protection mechanism for minority shareholders: First,we should perfect the litigation system that minority shareholders can use to encroach on their interests by ultimate shareholders,reduce the requirements of litigation conditions,and reduce the litigation costs of minority shareholders.Second,it is necessary to expand the medium and small shareholders' right to know about the enterprises.Finally,we must improve the ultimate shareholder information disclosure system.(2)Strengthen the social supervision function: First of all,for the audit,the credibility of the audit report should be strengthened.Second,for independent directors,the rights and obligations of independent directors should be clarified and the scope of responsibility of independent directors should be strengthened.