Research On Inheritance In Emergency And Crisis Management Of Family Business

In recent years,the unexpected departure of the founder of a family business has occurred from time to time,posing a new and severe test for the inter-generational succession of family businesses.For family businesses,how to deal with this problem has become a key concern.For family business successors,how to save the corporate image,stabilise core staff,relieve financial pressure,restore market confidence and ultimately help the business to continue to grow out of the predicament will also become an issue that they must address when taking over the business.Based on socio-emotional wealth theory and incentive theory,this paper studies the inheritance and crisis response of family business in unexpected situations,taking Seazen Holdings as an example,and obtains the following three main conclusions.(1)Compared to neutral,sudden crises that do not damage the corporate image,such crisis events in which the founder is forced to leave the company and seriously affect the external image of the company by breaking the law,causing a safety accident,making inappropriate comments,etc.,often lead to a significant drop in the company’s share price,termination of cooperation by correspondent companies,forced credit rating downgrades,and a steep increase in financing pressure,ultimately causing the company to fall into serious economic problems and credibility crisis.(2)Four main crisis measures of Seazen Holdings are identified,which are:publicly apologising to reduce the negative impact,disposing equity and debts and slackening off the pace of land acquisition to reduce capital pressure,guaranteeing sales performance to.enhance market confidence and implementing incentive plans to stabilise the core team.In addition,cultivating Wang Xiaosong in advance,who are the successor of Seazen Holdings,facilitated a smooth transition of power and provided a good decision-making environment for the implementation of the above measures.(3)Through a vertical comparison of Seazen Holdings’ buy and hold abnormal return,Tobin’s Q and certain financial indicators from 2017 to 2021 and a horizontal comparison of relevant amounts of three similar real estate enterprises,this paper concludes that in mid-September 2019,Seazen Holdings began to shake off the impact of the scandal and the overall market value at the end of 2019 not only returned to the pre-incident level,but also showed better-than-quote development;in the long term,although the real estate industry as a whole was downwardly affected by the tightening of industry policies and COVID-9 epidemic,the operating,profitability and development capabilities of Seazen Holdings remained optimistic in relative terms,and its overall performance was good.This paper also draws the following three insights.(1)Define a clear succession plan in advance.Inter-generational succession in family businesses is not simply a handover event,but a long process of succession grooming and gradual transfer of power.Founders need to help their successors to familiarise with various business operations,accumulate project experience,develop management skills and increase their own prestige,in order to complete the inter-generational succession.In addition,complete preparation for succession will enable the company to carry on the inheritance in an orderly manner when facing unforeseen circumstances and provide favourable conditions for the subsequent formulation and implementation of solutions.(2)Meet the 5s principles when crises occurred.After a scandal or other negative incident,enterprises should immediately confess their mistakes through authoritative channels,sincerely apologise,proactively cooperate with relevant authorities in their investigations and assume responsibility.Even if the netizens’ criticism does not stop after the apology,it effectively prevents public opinion from deteriorating again as a result of knowing the mistake but not correcting it,and paves the way for rehabilitating the corporate image in the future.(3)Ensure that they meet both the hygiene and incentive factors when developing incentive policies.On the one hand,companies should take emergency measures to maintain operations to meet the hygiene factors of core team;on the other hand,they should also develop appropriate incentive policies to retain talent and increase their motivation.However,there are also many shortcomings in this paper.First of all,due to the limitation in information gathering capabilities,the collected information is not complete and the identified measures may not be comprehensive.Secondly,since the 2022 annual report of Seazen Holdings has not been disclosed,this paper only analyses its performance from 2017 to 2021,failing to reflect the development situation in 2022.Finally,due to the limited practical experience,the discussion on the policy level may be inadequate in practice.It is hoped that more scholars will devote themselves to this area,and I hope that this article will serve as a useful reference.