An Empirical Research On The Relationship Between Corporate Governance’s Familization Of Private Listed Company And Firm Performance

In the past thirty years in the process of reforming and opening, private enterprisesbecome the main force of economic growth in our country gradually, and the problem ofprivate enterprises’ corporate governance is being focused by the attention of scholarsday by day. Due to the influence of the Chinese traditional culture and theintergenerational inheritance which is caused by the reason that the founder of theprivate enterprise is approaching retirement age, corporate governane’s familizationbecomes an significant feature of the private enterprises’ corporate governance. Thisarticle is going to do an empirical study of the relationship between corporategovernance’s familization of private listed company and firm performance.This article considers Chinese private listed corporation as the object of research,and the empirical samples are from annual cross-sectional data of670listed familycorporations in Shanghai Stock Exchange and Shenzhen Stock Exchange in2010. Andwe consider three demensions which are the ownership familization, controlfamilization and manamement familization as the research of the relationship with firmperformance. In the specific design of empirical research, this article chooses thespecific variables of corporation governance’s familization as follows: the relationshipbetween ownership familization and firm perfomance is meeasured by the ownership,creaiative family, divergence between the ownership and control and the familyrelationship. The control familization will dicover the relationship with firmperformance from the three aspects that are degree of concentration of family control,the familization board of directors and the intergenerational transition of familybusiness. The relationship between management familization and firm performance ismeasured by the numbers and the proportion of the managerial positions acted by thefamily members and the family CEO acted by the actual controller. In the choose ofspecific variable of firm performance, this article select return on assets (ROA) as theindicator of measureing firm performance, and the rate of return on net assets (ROE) asthe explanatory variable is tested for the stability test for the result of relevant research.Besides, we select some control variables: the scale of independent director, scale ofasset, total asset turnover, long-term liablity rate and industry. This article drawsseveral main conclusions by the result of empirical as follows:1. On the research of the relationship between the ownership familization and firm performance, the result reveals that there’s significant positive correlation between theownership and firm performance. On the other aspects of the ownership familization,divergence bettween the ownership and control and creaitive family has the negativecorrelation with firm performance,but it is not significant statistically. So is therelationship between the family relationship and firm performance.2. On the study of the relationship between control familization and firmperformance, we can find that there is significant positive correlation between thedegree of concentration in control and firm performance. On the other side of controlfamilization, there is positive correlation between the scale and proportion of the familymembers to the numbers of the board of the directors and firm performance as well asthe chairman acted by the actual controller,while it is negitive correlation between theintergenerational transition and fir performance. However, this three demensions arenot significant in statistic.3. On the analysis of the relationship between the management familization andfirm performance, the empirical study of this thesis reveals that there’s positivecorrelation between the three demensions and firm performance. The numbers and theproportion of the managerial positions acted by the family members,as well as thefamily CEO acted by the actual controller has the positive correlation with the firmperformance,but it is not significant statistically.The innovation of this paper lies in putting forward to the concept of familization.This article integrates and classifies the factors that affect the enterprise performance. Inthe perspective of the familization, this article analyses the relationship between theownership familization, control familization, management familization and firmperformance systematically and respectively.The structure of this article is as follows: the first chapter is introduction; thesecond chapter is the related literature review of the family firms; the third chapter is thedescription of status that is the familization of the private listed corporations’governance; the fourth chapter to the sixth chapter are the empirical research of the relationshipbetween the ownership familization, control familization, management familization andfirm performance in the private listed corporations; the seventh chapter is summary andprospect of the research.