Second-generation Succession and the Financialization of Assets: An Empirical Study of Chinese Family Firms. Issue 14 (13th November 2020)

• Record Type: Journal Article
• Authors: Chen, Jiaqi; Zhou, Fangzhao; He, Zhifang; Fu, Hui
• Is Part Of: Emerging markets finance & trade. Volume 56:Issue 14(2020)
• Page Start: 3294
• Page End: 3319
• Publication Date: 2020-11-13
• Subjects: Family firms -- second generation succession -- financialization of assets -- firm performance; G32 -- G34 -- G38; Balkan Peninsula -- Commerce -- Periodicals; Balkan Peninsula -- Foreign economic relations -- Periodicals; Europe, Central -- Commerce -- Periodicals; Europe, Central -- Foreign economic relations -- Periodicals; Europe, Eastern -- Commerce -- Periodicals; Europe, Eastern -- Foreign economic relations -- Periodicals; Turkey -- Commerce -- Periodicals; Turkey -- Foreign economic relations -- Periodicals; Asia -- Commerce -- Periodicals; Asia -- Foreign economic relations -- Periodicals; Eurasia -- Commerce -- Periodicals; Eurasia -- Foreign economic relations -- Periodicals; 382.05
• DOI: 10.1080/1540496X.2019.1695592
• Languages: English
• ISSNs: 1540-496X

Abstract

ABSTRACT: This research examines whether intra-family leadership succession in Chinese family firms influences the decision to allocate more financial assets, the factors that influence second-generation successors in making such decisions, and their impacts on firm performance. The study collected firm and CEO data in which second-generation CEOs' characteristics were captured, and the findings suggest second-generational involvement is a critical factor in the financialization of assets. Furthermore, the study finds that second-generation CEOs' characteristics, market competition, and financing constraints have significant effects on second-generation successors when making asset-allocating decisions, and this is particularly true for financing constraints due to capital reserve motivations. The study finds no significant relationship between the financialization of assets in second-generation family firms and the family firms' performance. This implies that firm innovation does not mean to neglect primary operating business. The results are robust after considering possible endogeneity issues and to various specifications of variables.