Market Effect And Influential Factors Of Management Succession In Chinese Listed Family Firms

Private companies have been the main force to promote Chinese economic growth, while the most of Chinese private enterprises are controlled by families. After reforming and opening up in China, the first generation of private entrepreneurs have reached retirement age, our family business will going through the first inter-generational succession peak. At the micro level, inter-generational family business succession are related to "family business evergreen" goals. At the macro level, due to the important role of the family business in Chinese economic development, the family business will have long-term impact on economic growth. Thus studying inter-generational succession of family firms has important practical and theoretical significance.First, the paper discusses the theory of family business inter-generational succession at home and abroad, and debates the relationship between the family business performance and inter-generational succession. Then the paper put forward the hypothesis.Second,using event study method, the paper concentrates on empirical analysis about market effect of listed family business inter-generational succession in China. The subjects were 60 in the listed implement control over the family business from the succession of Chinese A share market, where the inter-generational succession refers to the children of the founder served as general manager or chairman of enterprises. The day publishing relevant succession announcement is the event day, analyzing the short-and long-term market effect of inter-generation succession. The results show that the corporates have negative short-term average abnormal returns(CAAR) and long-term buy and hold abnormal returns(BHAR). This paper argues that market concerns about the ability of the successor may be the main reason for the negative effect of short-term market; and "founder effect" dominated the negative effect of long-term market.Finally, the paper tries to reveal the factors of market effect of intergenerational succession in listed family business. From the concept of control over the process of succession, this paper seeks explanatory variables, and uses the enterprise features as control variables. The empirical results show that the proportion of equity and the age of the founder have a significant impact on the long-term market effect, and the "founder effect" of the enterprise has a greater impact. In addition, the experience and qualifications of the successors do not have a significant impact on long-term market effects, which may show that the value of domestic listed family enterprise hinges on the social networks and tacit knowledge about the business.Combing family business succession theory, the paper examines the market effect of Chinese listed family firms intergenerational succession by event study method. The dissertation are reflected in the following aspects: First, the paper explains market effect of the family corporates succession by event study method, and investigates short-term response and long-term capital market reaction. Second,combined with management theories and models about family business, the paper wants to analyze the key determinants of inter-generation succession in family business to explain the capital market response differences.