Research On The Impact Of Intergenerational Succession On Firm Performance In Family Firms

Influenced by China’s traditional culture of "inheriting the father’s business from the son",founders generally choose their immediate blood relatives,that is,their children as heirs and support them to succeed.However,under the influence of family planning,the number of objects that founders can choose gradually decreases,and their love for their children may also bring stronger moral hazard and higher agency costs to the enterprise,resulting in a significant decline in firm performance.The relationship between intergenerational succession and firm performance has also been discussed in detail and depth in the existing literature.Most scholars believe that intergenerational succession will have a significant negative impact on family business performance and even long-term value,but some scholars believe that intergenerational succession has no significant or positive impact on firm performance.Therefore,this paper will select the sample of listed family enterprises in China for research,in order to provide some practical suggestions for Chinese enterprises.On the basis of reviewing previous literature and analyzing relevant theories,this paper selects the data of Chinese A-share listed family enterprises from 2008 to 2020 as the initial sample,and draws on previous research results to screen the family enterprises according to the more common standards to obtain the final sample for empirical research.Then a conclusion can be found from the results,which inform the negative correlation between intergenerational succession and family business performance is very significant,that is,intergenerational succession will lead to a significant decline in family business performance compared with previous years.In order to study the interaction mechanism between the two,this paper introduces the proportion of family members in the board of directors and senior management of the family business as an intermediary variable,which represents the altruistic degree of the founder of the family business in the differential structure.Although this will help the second generation to take over the enterprise smoothly,there are also problems of the lack of checks and balances of the second generation’s power and the difficulty of measuring the performance,which ultimately leads to the decline of the enterprise’s performance.The empirical research also shows that intergenerational succession will lead to the rise of founder altruism,which will increase the agency cost and have a negative impact on firm performance.At the same time,this paper adds the second generation’s gender,educational background,and kinship and estrangement with the founder as the adjusting variables,and draws the conclusion that the second generation’s educational background will have a significant positive regulatory effect on the performance of the family business,while the closer the blood relationship between the second generation and the founder is,the more significant the negative impact of intergenerational succession on the performance of the business is,and in the second generation’s gender,because there are fewer female heirs,It failed to test the moderating effect between intergenerational succession and firm performance.The results of this paper expand the relevant literature on intergenerational succession to a certain extent,provide a certain theoretical reference for the family enterprises that are in the stage of intergenerational succession,and put forward some practical suggestions on how to carry out the intergenerational succession smoothly and finally realize the family business everlasting.