Management Review

›› 2016, Vol. 28 ›› Issue (6): 150-161.

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Is Common Control Effective in Entrepreneurial Family Firms?——An Analysis Based on Chinese Publicly Held Family Firms

He Xiaogang1,2, Li Jing3, Zhang Yuanfei4, Lian Yanling5   

  1. 1. School of International Business Administration, Shanghai University of Finance and Economics, Shanghai 200433;
    2. School of Zhejiang, Shanghai University of Finance and Economics, Jinhua 321019;
    3. School of Economics and Management, Shanghai University of Political Science and Law, Shanghai 201701;
    4. China Universal Asset Management Co., Ltd, Shanghai 200120;
    5. School of Business, East China Normal University, Shanghai 200241
  • Received:2014-02-11 Online:2016-06-28 Published:2016-07-07

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Abstract:

This paper assumes that family members are not purely altruistic and short-sighted, but altruistic only to a certain extent. The main point is that common control by the founder and his family members is effective, because family members are bounded altruists who concern both emotional and material wealth. Based on the data of Chinese public listed companies, our empirical results show that, first, common control is the most widely used control mechanism in Chinese entrepreneurial family firms; second, firms that share ownership among family members are more effective than those owned by the founder alone; third, concerning about ownership and managerial rights together, the sharing of these rights among family members is also more effective than the holding of both the managerial and ownership right by the founder alone or the holding of the ownership right by the founder alone and holding of the managerial right by professional managers. Our results demonstrate that the self-employed family members do not act as pure altruists, but bounded altruists.

Key words: entrepreneurial families, common control, pure altruism, bounded altruism, governance efficiency