Family Business Succession And Stock Price Crash Risk

In China,private enterprises have contributed 65%of the total GDP,and are an indispensable corporate collective in China's economic development,while family-owned enterprises are the main force of private enterprises,accounting for nearly 60%of private enterprises will continue to expand.Compared with non-family companies,family companies control the family.The involvement of the family makes the family business need to be separated from the private enterprise,as a special enterprise collective to consider its related issues with the market separately.Existing research on the stock price crash of the company mainly focuses on the impact of the company's accounting information quality,company management characteristics and shareholding structure on the stock price crash risk.Research on the stock price crash risk of family companies is almost blank.Moreover,in the field of family business research,there are few literatures that consider the special nature of family business and the company's stock price.In addition,very few private companies make family business information public,because family companies generally do not give the public a low impression,and the family management of nepotism will make people doubt the company's performance,which will form market bias and affect the investment and expectations of company stocks.For example,society has reached a mainstream consensus on family businesses:not rich for three generations.Therefore,the long-term operation and sustainable development of family business is an important strategic goal of family business,and the realization of this goal will inevitably involve the inheritance of family business.At present,the family business in China is at the peak of the succession of the second generation of the family.The family business inheritance model is generally the internal inheritance of family members.Affected by the social structure of China's differential order pattern,the internal inheritance of family businesses also follows the principle of pro-distance and distance,and has the phenomenon of passing on children but not passing on women.In response to this inheritance law,this article attempts to study and evaluate the effect and quality of inheritance.In view of the market performance of individual stocks in recent years,this article will measure the economic consequences of the inheritance of family businesses from the perspective of market-level stock price crash risks.Specifically,according to the inheritance stage theory of family business,this article regards inheritance as a process,and analyzes the changes in stock price collapse risk with the start and end of the inheritance stage as key events.That is to analyze the impact of the preparatory inheritance event and the formal inheritance event on the stock price collapse risk.In addition,this article will also study the regulatory effect of different inheritance objects on the stock price crash risk of the company;at the same time,study the intermediary mechanism of family inheritance on stock price crash risk.This article uses Chinese A-share listed family companies from 2002 to 2017 as the sample,which is divided into preliminary inheritance(heirs as general managers,such as CFO and other senior executives)and formal inheritance(heirs as manager and chairman)based on the positions family-heirs held in the company.Then,according to the time when the heir first holds the position of senior executive,the comparative analysis of stock price crash risk was conducted in both samples respectively.The empirical results show that:(1)The events of family business preparatory inheritance and formal inheritance have a negative impact on the stock price crash risk;Moreover,the formal inheritance event has a greater impact on the stock price crash risk than the preparatory inheritance event;(2)The family business heirs affects the stock price crash risk differently,the direct heirs can significantly reduce the risk of stock price crash compared to the lineal relatives,but the blood and in-law relationship has no significant effect on the stock price crash risk;(3)The gender of family business heirs also have different effects on the stock price crash risk.When the heir is female,stock price crash risk is significantly lower than that of male heirs;(4)Family "tunneling" has an intermediary effect on the risk of stock price crash after the inheritance of the enterprise.The main contributions of this article are:(1)Although there have been a lot of studies on the formation mechanism and influencing factors of stock price crashes,most of them consider all listed companies in the Chinese A-share market as a sample,ignoring the family characteristics of family companies With regard to the impact of stock price crash risk,this paper will use family business as a research sample to enrich the research on the company-level influencing factors of stock price crash risk;(2)Existing research on the inheritance of family business rarely involves the consequences of inheritance.The literature only studies the inheritance performance from the financial accounting indicators and the subjective indicators such as the inheritance-related subject satisfaction,and has not yet formed a unified conclusion on the change(positive or negative)of the enterprise performance after the second-generation succession.This paper considers the results of family business inheritance from the market level and considers the risk of stock price crash,which can enrich the research of family business inheritance;(3)This paper finds that the type of inheritance object(direct or sideline)and gender can make a difference in the performance of enterprise inheritance.The discovery can provide a theoretical reference for family business succession planning and practice,and can promote the improvement of family business succession effect.