The Study Of The Relationship Between The Actual Controller Of The Family Business And The Over-investment

Since China's reform and opening up policy was conducted, China's private enterprises have been booming and realized the sustainable development, and have made great efforts to the great progress and the remarkable achievements of China's economy.From the microscopic perspective, China's private enterprises often exist in family or the similar form of family, therefore, we can't abandon the careful observation and exploration of the family business if we want to study China's private enterprises.In the initial period, the family business has low cost, family members maintain their mutual trust and reduce the agency cost through the "permanent relationship contract". A high degree of unity of family ownership and management can reduce the the first kind of agency problem to a great degree. However, with the expansion of enterprises, especially after the listed circulation of family business, family-based management also exposed some problems, especially the corporate governance issues with the core of the second agency problem. The controlling family makes the control exceed the cash flow rights through the the governance structure of pyramids, which is more likely to cause excessive investment and many other risk behaviors. After the famous incident of "iron",the overinvestment problem of family business gradually causes the attention of scholars.Unfortunately, the academic study of excessive investment of family enterprises is not much, but within the existing studies, some scholars think that equity checks and balances can suppress big shareholders to occupy small shareholders interests to a certain extent,and thus reduce the probability of excessive investment and improve the efficiency of governance. So, whether the governance structure of family business can affect its investment behaviors, and whether the equity checks and balances can restrain the excessive investment behavior of the family business, are worthy of our further studies.Based on the current development of family enterprises, this article selected data of A-share listed family firms from 2009 to 2013, and tested the empirical relationship between the powers involved of the actual controller of the family business and excessive investment behaviors. The results found that: The more powers of the family business controller are involved, the more likely that over-investment behaviors will happen, while equity balance can suppress the occurrence of the act. Further research showed that equity balance has different regulating effects on the two powers, the specific performance is that equity balance negatively regulates the relationship between the control involved and excessive investment, but positively regulates the relationship between the ownership involved and over-investment behaviors. Conclusions of this study provide reference about how to adjust the management structure of family enterprises and reform the management theory further.