An empirical study on family business&rsquo;s equity financing preference and its governance effect

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Science Research Management ›› 2014, Vol. 35 ›› Issue (9) : 87-97.

An empirical study on family business’s equity financing preference and its governance effect

Ge Yongsheng¹, Zhang Pengcheng²

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Abstract

Compared with businesses in a general sense, family business is not only a corporate system, but also embodies family ethics and characterized by duality of family and business. The paper takes A-share listed family companies in China from 2004 to 2010 as samples, draws on unbalanced panel data to explore equity financing preference of family business with dual characteristics, and analyzes the influence of the introduction of outside investors on the governance efficiency of family business. The research findings show that domestic family businesses were affected by the regulation of altruism while ushering in outside investors. The research further demonstrates that the introduction of strategic investors could promote the governance efficiency of family business effectively in the long run and that by contrast the introduction of financial investors could impact the governance efficiency of family business unremarkably.

Key words

family business / equity financing preference / altruism / governance

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Ge Yongsheng, Zhang Pengcheng. An empirical study on family business’s equity financing preference and its governance effect[J]. Science Research Management. 2014, 35(9): 87-97

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