An Empirical Study On The Relationship Between Different Succession Modes And Firm Performance

As most of the first-generation family business founders in modern China have been more than sixty years old,they will pass their baton in the near 5-15 years.How to choose family business successors becomes a hot topic both in academic and practical circles.Family business succession makes a great difference to the continuation and development of the family firm.This paper aims to help family business owners make decisions about the selection of successors and help Chinese family-owned firms achieve smooth succession.We describe family business succession modes from two aspects,one is the source of the successor,the other is the kinship between the predecessor and the successor.Based on the panel data of listed family firms which complete the succession from 2003 to 2015,we test the relationship between different succession modes and firm performance using statistical methods,such as descriptive statistical analysis,t-test,Wilcoxon-test and regression analysis.Through the empirical analysis,our findings are as the following.First,when the successor is a family member inside the family firm,the succession has a significantly positive relationship with firm market value but has a negative relationship with firm financial performance.Second,when the successor is a non-family member inside the family firm,the succession has a significantly positive relationship with firm financial performance and has a positive relationship with firm market value.Third,when the successor is a family member outside the family firm,the succession has a significantly negative relationship with firm market value.Fourth,when the successor is a non-family member outside the family firm,the succession has a significantly positive relationship with firm financial performance and has a positive relationship with firm market value.According to these results,this paper puts forward some relative suggestions.