Research On The Relationship Of Family Firm Governance Characteristics And Firm Market Value

It contributes great power to economy development of China that the private enterprises developing rapidly. Family firms appeared in private enterprises. Depending on the advantages of core cohesion, good cost control and so on, family firms have gradually become an indispensable force in private enterprises. Therefore, it can offer valuable proposals to improve family firm governance level that analyzing the effect of family firm governance on firm value, especially exploring effect paths of inner governance and external investor confidence, furthermore, the level proportion of inner and external influence. It has great influence on family firm growing and developing, and maintaining the capital market healthy.The paper divided family firm governance into two dimensions of board and equity characteristics from the point of inner governance and investor confidence. Furthermore, the board characteristics divided into structure, scale and behavior dimension, and the equity characteristics divided into ownership concentration and balance degree characteristics. Combined with theories and practice, the study uses six indexes of institutional investor shareholding ratio, price value ratio, price earning ratio and so on to build investor confidence index. On the basis of this, adopting the mediation effect test of three steps, the study chose GEM family firms from2011 to 2013 as samples, and empirically tested that family firm governance affect firm market value directly and investor confidence has an mediating effect. Finally, the study discussed the direct and indirect degree of Chinese family firm governance affecting on market value.The results show, firstly, independent director external supervision and board scale of family firms negatively affects firm market value, and investors' confidence as mediation effect is greater than the direct effect. The influence of family firm leadership structure on investor confidence and firm value is not been found. Secondly, board meeting times and director salaries have positive effect on firm market value, and the effect is transmitted by investor confidence in some extent. Thirdly, ownership concentration positively affects family firm value, then most of the effect is transmitted by investor confidence. Fourthly, both of the family firm external equity restriction and internal balancing negatively affect firm market value, and investors' confidence as mediation effect is greater than the direct effect.The innovation point of the study is that, firstly, from the perspective of inner governance and external investor confidence, the study proves the path of family firm governance affecting market value directly and indirectly, and identified the degree of the two paths accounted for the total effect, so it reveals the important mediating effect of investor confidence and enriches the theory of family firm governance. Secondly, based on the empirical results of governance characteristics, such as concentration, family internal balancing, affecting firm value, it reveals the family firms' special characteristics other than general firms will affect firm market value. Thirdly, the study chose samples from GEM family firms, which is more aligned with family firm high controlling characteristics, so it avoided possible research result errors by using mainboard family firm samples of equity separation and unconspicuous family characteristics, then it is more suitable for family firms of high stock concentration.