The Influence Of Joint Governance On The Level Of Enterprise Risk Taking

Since the reform and opening-up,Chinese family businesses have become an important pillar driving the country’s economic development,and their role cannot be ignored.The state leader have repeatedly stressed that the private economy is a key driving force for promoting social development and creating jobs,and plays an indispensable role in promoting China’s modernization process.At this year’s National People’s Congress,the deputies paid attention to this issues in the private economy sector,stating in the government work report that,with the optimization and adjustment of China’s epidemic prevention and control policies and the comprehensive resumption of production and life,the private economy will usher in new development opportunities.Currently,Chinese family businesses are generally in the intergenerational transition phase,with control being passed from the first-generation founder to the successor.The intergenerational transition of family businesses is mainly divided into three stages Participation Management,Joint Governance,and Accepting Management.For private entrepreneurs,although they are generally needed by the socio-economy,individual businesses may face risks.During this special period of intergenerational transition,family businesses face many uncertainties from internal and external environments.The attitudes of the first-generation founder and the successor towards risk-taking affect the level of risk-taking of the enterprise.In a fully competitive market,risk and return are proportional.Generally speaking,the higher the risk-taking level,the more risk investment will be chosen.For family businesses undergoing intergenerational transition,studying the impact of different stages of intergenerational transmission on risk-taking levels can help companies make better decisions,thereby helping family businesses smoothly achieve intergenerational transmission.This article first summarizes and comments on the relevant research literature on intergenerational transmission of family businesses and enterprise risk-taking,then introduces the agency theory and social emotional wealth theory.Analyzes the impact of different stages of intergenerational transmission of Chinese family businesses on enterprise risk-taking level based on these theories.Afterward,this article selects Fuyao Glass as a research case.Fuyao Glass went through the Participation Management stage from 2005 to 2015,formally entered the Joint Governance stage in 2015,and is currently still in the Joint Governance stage.This article will select Fuyao Glass’s annual reports from 2005 to 2021 and organize them into two stages of 2005-2015 and 2015-2021 for comparative analysis.The methods of measuring investment and financing behavior and performance are used to test the impact of different stages of intergenerational transmission on enterprise risk-taking levels.Through an analysis of Fuyao Glass’s risk-taking levels at different stages of intergenerational transmission,this article concludes that during the intergenerational transmission period,companies will face huge internal and external challenges,and under the influence of agency theory and social emotional wealth theory,founders and successors have the need to maintain family interests and consolidate family control.Second-generation successors bear a great deal of pressure,urgently need to prove their own abilities,establish their authority,and need to quickly change the various uncertainties brought by intergenerational transmission to the enterprise.However,as members of the family,successors also need to consider the interests of family members and shareholders.Therefore,second-generation successors have a lower risk-taking level when evaluating decision-making projects.Therefore,in the Joint Governance stage,the risk-taking level of family businesses is generally lower than that of the Participation Management stage.