Does Family Involvement Alleviate The Under-investment In Family Firms

For any company,investment is one of the important ways to promote the expansion of the company.Therefore,investment decisions are undoubtedly the most important component of a company's overall strategic decision-making.And investment efficiency will also affect the development of the company and even determine the survival of it.From the previous research,it can be found that compared with over-investment,most family firms in China are under-invested.Therefore,it is necessary to study the under-investment of family firm.Based on the theory of socioemotional wealth,this paper includes family involvement into the research framework and analyzes the impact of family involvement on the under-investment of family firm.This paper collects data on listed family firms from 2011 to 2016.Through empirical tests,it demonstrates the impact of family involvement on the underinvestment,based on socioemotional wealth perspective.The conclusions are as follows:(1)In terms of family involvement in ownership,the separation of two rights will exacerbate the under-investment,while the increase of cash flow right will help to weaken the positive relationship between the two rights separation and underinvestment.(2)In terms of family involvement in management,it proves that family members holding important positions in the management can alleviate the underinvestment.Meanwhile,if the family managers are well educated,the level of underinvestment can be alleviated.This study shows that developing a reasonable family involvement structure will improve the efficiency of business investment.