Research On Internal Conflict And Corporate Governance In Family Business ——Taking Leysen As An Example

With the implementation of the reform and opening up policy,the number of private enterprises has been increasing.and the private economy has also been developing.which has become an important pillar of the social economy.According to the latest data from the National Survey of Private Enterprises,most private enterprises are managed and controlled by families,and at least 70 percent of private enterprises are family-owned.Because family business plays an important role in the capital market and its own characteristics of integrating family and enterprise management systems.researching on family business is becoming increasingly important.In the early stage of establishment,family enterprises do have many advantages that other types of enterprises do not have.However,when the scale of enterprises has become larger,the problems existing in the governance mode of the family enterprises become increasingly obvious,and the conflicts within enterprises are more common,which can cause the internal friction,and seriously hinder the development of company.In the process of enterprise development,the problems of internal family conflicts appeared in Leysen,w hich greatly affected the company's business performance,market competitiveness and internal governance.The market value has evaporated more than half,and the development has become much worse.Therefore,Leysen is typical and representative in the study of internal conflicts in family enterprises.At present.most of the relevant researches focus on family succession conflicts or the second type of agency problems,namely the conflicts between the large shareholders of the family and the minority shareholders in society.However,there are relatively fewer researches on the internal conflicts between the internal managers of the family and the controlling families in the first type of agency problems.Mo reover,most of them are mainly empirical studies,and no consistent conclusions have been formed on relevant concepts and issues.This paper adopts single case study method,literature research method,comparative analysis method.qualitative analysis and quantitative analysis method.and selects Leysen,a family enterprise in the jewelry industry,as a case study.Based on three layers of two sides principal-agent theory.relationship governance and formal governance theory.altruism and egoism theory,this paper analyzes the causes of internal conflicts in family enterprises.mainly including three aspects:(1)the failure of family relationship governance.Shen Dongjun.one of the founders in the company,was also a member of Ma Jun's family before his divorce.With the dissolution of Shen Dongjun's marriage with his ex-wife,Ma Qiao,the kinship bond and trust foundation used by both sides to maintain the relationship also disappeared.Because of different interest demands,internal conflicts are more likely to occur.(2)Unreasonable equity allocation.At the beginning of the establishment of the company,the equity distribution between the two parties is too equal.Once the founders divorce and split the equity,this balance will be broken,resulting in internal conflicts.(3)Weak internal control,lack of supervision mechanism,resulting in intensified conflicts.Then,this paper collects and sorts out the financial data and other information of Leysen and other companies in the same industry,and analyzes the impact of the internal conflicts of Leysen on all aspects,with the methods of event analysis and comparative analysis,as follows:(1)From the perspective of the impact on corporate value,internal conflicts cause stock price fluctuations,leading to the evaporation of market value,which damages shareholders' rights and interests,and reduces investors' confidence;(2)According to the horizontal and vertical comparison of the company's financial data indicators,it is found that the internal conflict makes company's financial performance worse;(3)In the period of internal conflict,compared with other companies in the industry,Leysen's sales channels shrunk year by year,and the revenue of main products and R?D investment decreased year by year,which reflects the decline of market competitiveness during the period of internal conflict;(4)From the perspective of corporate internal governance,internal conflicts are more likely to lead to factional conflicts,and senior executives leave one after another,affecting the stable operation of the company;At the same time,it will also lead to the change of the actual controller,which will change the company's strategic direction and add uncertainties to the company's future development.Finally,this paper draws relevant conclusions based on case analysis,and puts forward relevant suggestions to prevent and solve the internal conflicts of family business.To sum up,this paper holds that for family business,the occurrence of internal conflicts,may directly affect the ownership structure of the enterprise and lead to the change of the actual controller.Moreover,the founders focus on gaining control of the company while ignoring the operation and development of the enterprise,which will not only cause the internal management problems of the company and affect the stable operation of the company,but also cause the stock price fluctuation and market value evaporation of the company,and damage the corporate value and social image.Through this case,I hope to bring enlightenment to the governance of family business in China,and help to enrich and expand the current research on internal conflicts in family business.