A Research On Motives And Effects Of External Investors Introduced By Family Business

As the particularities of the family business and its pivotal role in the capital markets, combined with it facing financing difficulties at the present stage, equity financing of family business and its effect on the family business became a research focus.Firstly, we developed our logic thinking from the existing review and the analysis of the theory and reality situation. At present, the resulting resource constraint, such as the shortage of capital、talent、technology, and the limitation of corporate governance, always bothering the growth of family business. In the plight of resource constraints, family business willing to transfer some of the stock rights to introduce the external capital. But, when the external investor enter, certainly will cause the change of ownership structure, and then cause the change of the power and the benefit distribution pattern. When the family controlling shareholders foresee this result, they certainly will selectively introduce different endowment external investors according to family preference. Since the external investor’s endowment is different, so their purpose moved into the family business and their requirement of the power distribution will be different. The external investor solving the resource constraint problem of the family business, and they will affect the deeper levels of the family business, such as, corporate governance, enterprise system and so on.Further, we chooses listed family business that introducing strategic and financial investors from2004to2010,establishes panel data, builds a regression analysis model,to examine the motivation and effect of family business to introduce strategic and financial investors. We found that:domestic family business introduced the external investor due to the resource constraints. But the altruism of the family would affect the choose of the different type external investor. Further study found that the introduction of strategic investors can effectively improve long-term family business governance efficiency, and the introduction of financial investors of family corporate governance efficiency of the influence is not significant.