Research On Clan Culture And The Governance Effect Of Family Firms

Chinese family firm is a modern economic organization based on clan culture,which takes regional blood contract as the economic,social and survival basis,and infiltrated and influenced by various clan arrangements,such as informal institution with sharing rules and beliefs.Generally speaking,clan culture refers to the unique trust mode,resource arrangement and cooperation mechanism based on blood relationship instead of formal institution.The existing literature specifically has specifically investigated the impact and consequences of clan culture and forms two opinions:One view is that clan culture can enhance mutual trust between directors,supervisors and senior officials,which form a community of interests,help to share risks and meet challenges;Another view is that clan culture can increase the agency cost of firms,damage the interests of external non-family members,and eventually evolve into a evolve into a "Chaxugeju" of governance structure..Using the samples of Chinese A-share fam ily listed companies from 2008 to 2019,this paper studies the impact of clan culture on the governance effect in family firms.Further,we analyze the impact of clan culture on firm governance in combination with the governance environment faced by firms.The main contents and conclusions are as follows:Firstly,through the empirical research on clan culture and ownership structure,we have examined equity incentive from the perspective of kinship trust and informal institution,based on the clan culture measured by the family tree density of the actual controller’s native place.The study found that he actual controller’s clan culture concept can improve the degree of family listed enterprises’ relatives’ participation in equity.Further,from analyzing the heterogeneity of different governance environments,the results show that the actual controller native to the firm positively regulates the relationship between clan culture and the board of directors of family firms,while analysts’ attention and Big Four negatively regulate the relationship.In order to solve the problem of endogeneity,measurement error and increase the robustness of the conclusion,we chose the terrain slope of the actual controller’ s native place and the per capita rice planting area as the instrumental variable,replaced the independent variable,replaced the regression method,and selected different sub-samples for testing through the missing variable test.In the mechanism study,it is found that the clan culture of the actual controller’s native place is the mechanism that imperceptibly edifies,affects the governance of family firms,and then has an impact on the decision-making of the board structure of family firms.Secondly,through the empirical research on clan culture and board structure,we have examined the board structure from the perspective of kinship trust and informal institution,based on the clan culture measured by the family tree density of the actual controller’s native place.The study found that the actual controller’s clan culture concept can improve the degree of relatives’ participation in the board of directors of family listed firms.Further,from the analysis of the heterogeneity of different governance environments,the results show that the actual controller native to the firm positively regulates the relationship between clan culture and the board of directors of family firms,while analysts’ attention and Big Four negatively regulate the relationship.In order to solve the problem of endogeneity,measurement error and increase the robustness of the conclusion,we chose the terrain slope of the actual controller’s native place and the per capita rice planting area as the instrumental variable,replaced the independent variable,replaced the regression method,and selected different subsamples for testing through the missing variable test.In the mechanism study,it is found that the clan culture of the actual controller’s native place is the mechanism that imperceptibly edifies,affects the governance of family firms,and then has an impact on the decision-making of the board structure of family firms.Thirdly,through the empirical research on clan culture and board dissent,we have examined the board structure from the perspective of kinship trust and informal institution,based on the clan culture measured by the family tree density of the actual controller’s native place.The study found that the actual controller’s clan culture concept can improve the objection level of the board of directors of family listed firms.Further,from the analysis of the heterogeneity of different governance environments,the results show that the positive correlation between clan culture and the objection of the board of directors of family firms is adjusted by the four negative aspects of native place as the actual controller,local operation,analyst attention and Big Four.In order to solve the problem of endogeneity,measurement error and increase the robustness of the conclusion,we chose the terrain slope of the actual controller’s nati ve place and the per capita rice planting area as the instrumental variable,replaced the independent variable,replaced the regression method,and selected different sub samples for testing through the missing variable test.In the mechanism study,it is found that the actual controller’s clan culture promotes the family firm to introduce more relatives and executi ves,and then enhances the degree of objection of the board of directors of the family firms.Fourthly,through the empirical study of clan culture and dual-agency costs,we examine the dual agency problem from the perspective of kinship trust and informal system,based on the clan culture measured by the actual controller’s native place genealogy density.It is found that the actual controller’s clan culture concept can significantly reduce the first kind of agency cost of family listed firms,but increase the second kind of agency cost.Further,from the analysis of the heterogeneity of different governance environments,the results show that the degree of marketization,legal environment and Big Four negatively regulate the positive relationship between clan culture and dual agency cost.In order to solve the problem of endogeneity,measurement error and increase the robustness of the conclusion,we chose the terrain slope of the actual controller’s native place and the per capita rice planting area as the instrumental variable,replaced the independent variable,replaced the regression method,and selected different sub samples for testing through the missing variable test.In the mechanism study,it is found that the clan culture of the actual controller promotes the family firm to introduce more relatives and executives,and then increases the dual agency cost of the family firms.The innovation of this paper is mainly reflected in the following aspects:Firstly,by matching the Ming Dynasty to 1990 genealogy density to measure the variables related to clan culture and family firm corporate governance,this paper makes up for the lack of clan accumulation effect that is difficult to transmit by the family tree index in a single year used in the existing research,more accurately analyzes the impact of clan culture on family business corporate governance,and expands and enriches the relevant research on the impact of clan culture on the development of family firms.Secondly,starting from the important traditional Chinese culture,this paper investigates its governance effect on micro firms,enriches the connotation and research perspective of clan culture,and further expands the scope of economic consequences of clan culture.Thirdly,"all things are born,but only know and keep their roots".Traditional culture carries the changes of everyone’s cultural psychology,lifestyle and emotional support.It is the most basic cultural gene and soft power of the Chinese nation,which needs our attention.Although clan culture has supplemented the deficiencies of various formal systems in the economy and society in the long history,the limitations of the modern governance system and capacity of family enterprises cannot be ignored.Fourthly,the conclusion of this paper makes us strengthen our cultural selfconfidence,inherit and carry forward the positive role of Chinese clan culture,avoid the negative impact of negative factors,and make traditional culture such as clan culture keep pace with the times in the management of local family organizations.