Legal Environment,Dominating Governance By Actual Family Firm Controllers And Interest Encroachment

Since economic reform,the private economy developed rapidly.then family firm gradually played an important part in China's national economic growth,Also scholars pay more attention to family business research as an independent field.Family firm consists of two organizational forms: family and enterprise.so their ownership structure and governance model have their unique features.On the one hand,family involvement brings family-specific resources to the enterprise,meanwhile reducing the manager's adverse selection and moral hazard to a certain extent,but on the other hand,the family's excess control of firm will lead to serious tunneling behavior of strong shareholder.It is common that the actual controller of the family firm services as the chairman of the listed company to conduct the dominant governance in China.Therefore,is this governance arrangement in order to consolidate the control and engage in further benefit expropriation? Or is it a signal that they have confidence in the long-term development of enterprises? From the existing family business research literature,the study of family involvement can be divided into three categories: family ownership involvement,family management involvement,and heritage will.Most of the literature focuses on the study of first type.The research on family management involvement is limited,and they didn't distinguish the involvement of the actual controller or other family members,acting as chairman or CEO.Therefore,based on the practical and theoretical background,this paper put forward a new research perspective: Dose the actual controller conducting the dominant in family firm will affect the level of benefit expropriation? How does the different legal environment affect the above relationship? In addition,this paper conducts further research on this topic from the perspectives of the equity balance degree,political connection,feature of remuneration and personal characteristics.In order to solve the above problem,at first,this article summarized the existing literature,learned theories related to themes,put forward two relevant hypotheses.Secondly,we obtained relevant data from the CSMAR database and CCER database,then we use Excel to sort out the data preliminarily.Thirdly,through a series of descriptive statistics,correlation analysis,and empirical multiple regression,we confirmed the initial hypothesis.At last,robustness test further enhances the accuracy of the conclusion.The research conclusion can be summarized in two aspects: First,the actual controller conducting the dominant in family firm will reduce the behavior of family expropriation.When the actual controller of family firm dominates governance,On the one hand,the embezzlement behavior of family firm is subject to more external supervision.on the other hand,From Social-emotional wealth Theory,we hold that the actual controller who dominant the family firm is more willing to pursue the long-term development of the enterprise and give up the short-sighted behavior.Second,In areas with a poor legal environment,the controller conducting the dominant in family firm will has a more pronounced inhibitory effect on family expropriation.Further,the research in this paper also finds that the balance of equity plays a role in promoting the relationship between the dominant controller and expropriation;political connections have a restraining effect on above relationship;Founder governance and CEO duality will further reduce the expropriation.