Family Control, Family Inheritance And Corporate Value

Family businesses cover a wide range in the world, their deep impact of the world economic and cultural development,making them the hottest topic nowadays.Inheritance, one of the most important problems that have plagued family businesses for a long time is the sustainable development,especially in the absence of theory and practice in China.In this paper,it based on previous research,and took Chinese family business heritage for the study, combination with cases and empirical,Discussed how do the management, family business heritage impact on the company value. This paper analyzed the background of Chinese family business development, scholars and institutional theories, models, combined these and three classic cases to better clarify.The results showed that three family businesses tend to have internal heritage, and heritage within the family obviously beneficial to enhance the company’s performance,the higher heritage ratio of the company, the greater positive performance of impact.However, due to heir cultivate, timing of succession and other issues, there are still part of family businesses are facing value loss or even bankruptcy, some may have to sale to others. Next, this paper selected 1785 Chinese family businesses from2006-2014, a total of 6436 samples regression analysis. The empirical results showed that:(1) Family Firm listing way, whether the actual controller of the company serving as chairman or general manager, whether the company controlled by a family business group, they are related to Tobin q in significant negative correlations, while the dual of chairman and general manager were significant positive to tobin q, family business management and control model(such as the actual controller serving as board chairman or general manager of a listed company, and whether the company controlled by a group etc.) had no significant effect on the ROA.(2) whether the actual controller serving as chairman or general manager of a listed company, if controlled by Group, and IPO listing or back-door listing, the three variables affected on asset-liability ratio in a significantly negative way. At the same time, dual of chairman and general manager affected on asset-liability ratio in a significantly positively way. IPO listing and company’s industrial restructuring had significant negative correlation. Chairman or general manager concurrently serving as executives affected on company’s industrial restructuring in a significant positive way;(3)changes of the chairman and executives affected on Tobin q in a significant positive way, non-founder serving as chairman or general manager affected on Tobin q in a significant negative way. These results suggest that family group managing listed company would adversely affect the company, which is reasonable in reality, such as actual controller who serving as executive may manipulate for their own benefit and other manipulation, while the chairman company for his own benefit, meanwhile, the board changes, family executive changes, non-family executive changes to family member, although these three variables will have a negative impact on financial performance in the short term, it had long-term value and development benefit for thecompany, family business heritage and executive changes in favor of family businesses sustainable development. Finally, we made seven recommendations to the Chinese family businesses control and heritage:(1) listed companies do not need to be completely controlled by their groups;(2) the actual controller could decide whether dual depending on the circumstances, we suggest not if there haven’t any special demand, but suggest that chairman or general manager dual of the holding company executives;(3) the company should choose back-door listing instead of IPO;(4)successors should be selected and trained earlier;(5) on the mode of heritage selection,it is main management rights if choose internal heritage;(6) grasp the opportunity of heritage timing, don’t delay for too long;(7) family members should actively propose family culture after heritage, play it to their strengths.