The Effect Of Founder’s Control Changes On Corporate Value In Family Business

Control is the core of corporate governance and provides security for the company’s operating. Control of enterprises is a determinant factor for the development of companies, building a bridge between corporate governance and capital market innovation. During this processing, the control market of transfer in control right is an important pillar of the erection of the bridge. Through combining theoretical and empirical analysis on the evolution of the theory about control right market, mechanism of action, restriction factors etc., this paper tries to analysis exsiting form, function and influence factors of transfer theory in controlling right market on the special institution background in China. Finally, aiming at the existent problem, this paper discusses on policy path of the transfer in control market to founders of family listing Corporation.In western capital market, which is more mature, control market of the transfer exists for constrainting operating behaviors of top managers. Around this core, the theory of control market of the transfer has gradually improved. In the domestic market, control theory has evolved. Based on detailed analysis, this paper illustrates the change of founder control in family enterprises. As a home grown economic power, Chinese private enterprises are playing an increasingly important role in the development of economic. Among this, family business account for90%. Family enterprises, as the most popular enterprise organization in the world, will play a decisive role in the social economy in advanced or developing countries. Therefore, research on the founder control of family enterprises has certain practical value, especially in the emerging world, just like our country, in which the economic develop rapidly but the legal system is not sound.At present, Chinese family enterprises have experienced great changes in founder control, resulting from either succession or the departure of founders. Therefore, the problem of the changes of founder control gradually exposed. On the basis of existing research, this paper finds that dilution and complete loss of control have negative influence on corporate value through empirical test. Plus, according to the two kinds of circumstances, this paper also makes lagged empirical test, finding that the enterprise value has a negative long-term effect, but this effect in founder control is no longer significant change for third years; Meantime, Study found that the correlation coefficient in the change of control is higher than the change of ownership changes, which illustrates that the influence of loss of control on the value of enterprises is greater than the changes of founder control. Finally, these results suggest that founders are irreplaceable to some extent in the process of enterprise development, especially in China which relational contract occupies a leading position, and founders themselves have specific assets that cannot be replaced and play a prominent role in the family enterprises.