Founder's political connections, second generation involvement, and family firm performance: Evidence from China

Xu, Nianhang; Yuan, Qingbo; Jiang, Xuanyu; Chan, Kam C.

doi:10.1016/j.jcorpfin.2015.01.004

Cited by 171 publications

(148 citation statements)

References 30 publications

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“…in their various roles (owners and/or managers), rather than comparing just one type to the common benchmark of widely held firms. Our paper also adds to the growing literature about Chinese family firms (Cheng et al, 2014;Bennedsen et al, 2015;Cao et al, 2015;Xu et al, 2015) and corporate governance in China (Cao et al, 2011;Conyon and He, 2011;Huang et al, 2011;Peng et al, 2011;He et al, 2013;Jiang and Kim, 2014).…”

Section: Accepted Manuscriptmentioning

confidence: 56%

“…At the very least, the relatively higher prevalence of entrepreneur-and family-controlled firms in regions with high institutional efficiency suggests that these firms do not inhibit growth and development as is sometimes argued (Morck et al (2005). (Fan et al, 2007a;Chen et al, 2011;Xu et al, 2013Xu et al, , 2015 …”

Section: Discussionmentioning

confidence: 99%

“…Families can also add value to their firms in product markets, through their business and political connections or reputation. Xu et al (2015) provide evidence that political connections in China positively influence both the likelihood of second-generation family management in Chinese firms as well as their performance. While fundamentally different from the legal investor protection argument, this -internal markets‖ explanation shares with it the prediction that family firms should be more prevalent in less developed markets.…”

Section: Accepted Manuscriptmentioning

confidence: 91%

See 2 more Smart Citations

The role of institutional development in the prevalence and performance of entrepreneur and family-controlled firms

Amit

Ding

Villalonga

et al. 2015

Journal of Corporate Finance

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Section: Accepted Manuscriptmentioning

confidence: 56%

Section: Discussionmentioning

confidence: 99%

Section: Accepted Manuscriptmentioning

confidence: 91%

See 1 more Smart Citation

The role of institutional development in the prevalence and performance of entrepreneur and family-controlled firms

Amit

Ding

Villalonga

et al. 2015

Journal of Corporate Finance

View full text Add to dashboard Cite

“…In a similar vein, Yang and Jiang [25] shows that policy uncertainty has a significantly negative effect on a firm's performance, yet participation in political affairs tends to mitigate this impact. Further, Xu, Yuan [26] finds that founders of family-owned firms who have a solid government relationship are more likely to appoint a second-generation family member as chairman, CEO, or director, which, in turn, could reduce transfer costs, improving firm performance.…”

Section: Introductionmentioning

confidence: 99%

Family-Owned Firms and Stock Returns: Evidence from the Chinese Stock Market

Zhang¹,

Gregory‐Allen²

2018

TEL

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We examine stock return performance of Chinese family-firms vs. Nonfamily-firms, and the impact on family-firm returns of firm size, having a founder as CEO, and levels of family ownership. We model returns with the Capital Asset Pricing Model (CAPM), the Fama-French 3-factor model [1], and a new 5-factor model we modified from Miralles-Marcelo, Miralles-Quirós [2], which adds factors for debt and illiquidity. In previous studies, though the prevalence is for family-firm outperformance, the results have been mixed. Using CAPM or the Fama-French 3-factor model, we find that family-firms outperform nonfamily-firms, but with the 5-factor model that outperformance vanishes, and this is robust to controlling for the GFC. For the founder CEO, firm size and family ownership considerations, again previous research has been mixed. With CAPM and Fama-French 3-factor models, we find that founder CEOs outperform nonfounder, large firms outperform small firms, and higher family ownership outperforms lower ownership. However, with the 5-factor model, only size remains as having significant impact. This study helps to reconcile conflicting results in previous research.

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“…However, some family firms expand their areas of investment by fostering connections with the government. There is much evidence that political connectedness can help family firms enter regulated industries (Ding, Jia, Wu, & Zhang, 2014;Faccio, 2006;Li, Meng, Wang, & Zhou, 2008;Xu, Yuan, Jiang, & Chan, 2015), as the political connections may help family firms obtain more business transformation options.…”

Section: Introductionmentioning

confidence: 99%

Political connection and business transformation in family firms: Evidence from China

Wang

Song

et al. 2016

Journal of Family Business Strategy

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A B S T R A C TWe investigate the impact of family ownership on core business transformation and the moderating role of political connections in this relation through a Probit model, conditional Logit model, and Heckman selection model with instrumental variable using data from Chinese listed companies covering 2001-2010. The results demonstrate that, compared with non-family firms, family firms are more likely to transform their core business, enter strongly correlative industries and non-regulated industries, and adopt a mergers and acquisitions (M&A) mode. Furthermore, compared with politically non-connected family firms, family firms with political connections are more likely to conduct business transformation and adopt M&A rather than an internal cultivation mode to realize transformation. In addition, political connections make family firms more likely to enter weakly correlative industries and increase their chances of entering government-regulated industries.

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Founder's political connections, second generation involvement, and family firm performance: Evidence from China

Cited by 171 publications

References 30 publications

The role of institutional development in the prevalence and performance of entrepreneur and family-controlled firms

The role of institutional development in the prevalence and performance of entrepreneur and family-controlled firms

Family-Owned Firms and Stock Returns: Evidence from the Chinese Stock Market

Political connection and business transformation in family firms: Evidence from China

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