The Second Generation Intervention Of Family Businesses And Enterprise Financialization

The vast majority of family businesses in China were born in the entrepreneurial wave or restructuring of state-owned enterprises after the reform and opening up.After more than 40 years,Chinese family businesses have ushered in a peak period of intergenerational inheritance.Unlike the first generation,the successors often have a good growth environment and educational background,and many of the second generation also have financial related experience.These factors can have an impact on the decisions of the second generation after their involvement in the enterprise.Furthermore,the involvement of the second generation is not a one-step process,and the impact of the second generation on the strategic decisions of the enterprise varies depending on the environment in which the enterprise is located at different stages.At the same time,more and more physical enterprises are beginning to finance,and existing research shows that: on the one hand,corporate finance may play a "reservoir effect",on the other hand,it may cause a "crowding out effect" on the performance of corporate entities.So,how will the second generation intervention affect the financial investment of family businesses? Is there any difference in the financial investment of enterprises at different stages of second generation intervention? What impact will corporate financialization have on the performance of family businesses? To answer the above questions,this article analyzes the differences and changes in the financial investment level of enterprises at different stages of the second generation involvement of family enterprises,taking the second generation involvement as the background.The research in this article not only enriches the existing research content in relevant fields,but also contributes to the smooth transition and transition of family businesses during the special period,and the realization of the family’s foundation and prosperity.In order to reveal the relationship between the second generation involvement of family firms and corporate financialization,this paper first uses descriptive analysis to examine the relationship between the second generation involvement of family firms listed in A-shares and corporate financialization.Subsequently,this article focuses on Far East Holdings,using a combination of vertical and horizontal comparisons to demonstrate the impact of the second generation of family business intervention on corporate financialization,the related benefits of financialization,and analyzes the motivation for the second generation of financialization.Finally,this article explains the impact of corporate financialization on Far East Holdings from the perspectives of financial performance and market performance.After research,the article concluded: First,China is in the heyday of intergenerational inheritance.The involvement of the second generation of the family in the enterprise will increase financial investment,and this positive catalytic effect continues to strengthen with the deepening of the second generation’s control.Jiang Chengzhi,the second generation of Far East Holdings,began to allocate a large amount of financial assets after his involvement in family businesses,and the proportion of financialization further increased after he became chairman.At the same time,corporate financialization can generate revenue,but this revenue has great instability.Secondly,in terms of the motivation for financialization,the second generation is more inclined to obtain high returns.The financial assets allocated by Jiang Chengzhi,the second generation of the Far East,are also dominated by long-term financial assets,reflecting his "capital profit seeking" motivation.Thirdly,corporate financialization will have an impact on corporate performance.Overall,financialization will occupy the working capital of enterprises,leading to an increase in enterprise financing;At the same time,it may increase the volatility and uncertainty of profitability;It will also have a significant adverse impact on short-term solvency and growth capacity;However,financialization has a small impact on the operating capacity of total assets.In addition,the financialization of enterprises can harm their market value to a certain extent.Finally,based on research findings,in order to ensure a smooth transition of family businesses and prevent the second generation of excessive financialization from causing deterioration in business performance,this article proposes three suggestions for reference from the perspective of both the family and the second generation of individuals.