| Since the implementation of China’s reform and opening-up policy,private enterprises have gradually gained ideological and institutional legitimacy for their survival and development,and with the rapid growth of the economy,they have come to occupy an indispensable and important position in terms of gross national product,employment,exports and tax revenue.Most of these are family-controlled enterprises.In recent years,as the first generation of entrepreneurs has gradually reached the age of majority,the time has come for a nationwide succession of family businesses.The smooth succession is a matter of life and death for thousands of family businesses,and will also affect the macroeconomic development of China as a whole.As the economy is transforming and upgrading,the pace of second-generation succession is gradually accelerating.However,experience from around the world shows that the road to succession for the second generation is often a thorny one.On the one hand,although the younger generation is often more educated and internationally minded than their parents,they lack the legitimacy of their own authority and face the embarrassment of not being able to convince the public.On the other hand,one generation of entrepreneurs has already made its own mark,and the results and honours it has created have become a reference point for the second generation to surpass in the short term.In the process of succession,how the second generation can overcome the negative effects of their own lack of legitimacy and excessive expectations within the organisation by enhancing the efficiency of family business investment,and establish the legitimacy of their authority is an issue worth exploring in theory and practice.This paper explores the impact of intergenerational inheritance on the investment efficiency of family firms,using Chinese Shanghai and Shenzhen A-share listed family firms from 2014-2021 as a research sample.The study finds that intergenerational inheritance increases the investment efficiency of family firms,and this effect is more significant in family firms with closer kinship ties.The mechanism test shows that agency costs and corporate information transparency play a mediating role in the effect of intergenerational transmission on the investment efficiency of family firms.This paper provides empirical evidence and managerial insights into how intergenerational inheritance affects the investment efficiency of family firms in the context of intergenerational succession.Intergenerational inheritance means that the second generation is gradually involved in important corporate decisions,and in order for the second generation to succeed and gain legitimacy,the founding generation and the second generation are more careful in their choice of investment projects,which undoubtedly affects the investment efficiency of family firms.However,most of the existing literature has focused on the impact of family control,CEO type,equity incentives and board seats on the investment efficiency of family firms,while little research has been conducted on the investment efficiency of family firms in the context of intergenerational succession.This paper examines the impact of intergenerational transmission on the investment efficiency of family firms.As well as the moderating effects of second-generation education and kinship on intergenerational transmission and family firm investment efficiency,and the mediating effects of agency costs and information transparency on intergenerational transmission and family firm investment efficiency.First.Based on a review of the research literature and theoretical foundations related to the relationship between intergenerational inheritance,agency costs and information transparency,and investment efficiency in family firms,this paper sorts out the theoretical logic of intergenerational inheritance affecting investment efficiency.Secondly,a sample of family-controlled listed enterprises in Shanghai and Shenzhen A-shares in China from 2014 to 2021 is selected using Stata 16.0 statistical software as a tool to deeply explore the dialectical relationship between the three.The empirical test results show that:(1)intergenerational inheritance will improve the investment efficiency of family firms.(2)The effect of intergenerational inheritance on the investment efficiency of family firms is more significant in family firms with closer kinship ties,but not in family firms with higher second generation education.(3)The mechanism test shows that intergenerational inheritance will improve the investment efficiency of family firms by reducing agency costs and increasing the transparency of corporate information.On the basis of the conclusion,this paper argues that in the process of intergenerational transmission,the founding generation should pay attention to the cultivation of the second generation.On the one hand,the father can pass on his own methods and work experience to the second generation to help them rise to the top;on the other hand,the father can formulate a succession plan in advance and improve the succession training mechanism,so as to prepare the second generation to take over.In addition to the support and assistance of the founding generation,the second generation,as the successor,should also play to their own strengths,identify and create opportunities to gain the support and recognition of stakeholders by improving the investment efficiency of the business.The father and second generation should focus on improving the internal governance of the company,establish a long-term vision,reduce emptying practices and improve the quality of accounting information in order to attract more external investors,thereby achieving sustainable corporate development.In short,the founding and second generations should realise that only when fathers and sons work together can they achieve a long-lasting family business.In a theoretical sense,this study extends the scope of research on intergenerational inheritance,agency costs and information transparency,investment efficiency and the interrelationship between the variables,and enriches the research results on the legitimacy of authority and social and emotional wealth of family enterprises. |
