One-child policy and family firms in China

Jerry Cao, Douglas Cumming and Xiaoming Wang

Journal of Corporate Finance, 2015, vol. 33, issue C, 317-329

Abstract: Family business plays important roles to fuel economic growth in China. Due to the one-child policy, family firms are increasingly facing human capital constraints for within-family succession. Having only one heir decreases the probability of continuing family management by over 3%, reduces the probability of adult children working in family firms by 14%, and significantly decreases founders' expectations of having young heirs for succession. Having fewer children negatively affects founder's expectation to go public, reduces family firm's reinvestment rate and R&D. Overall, the evidence suggests that the human capital constraints due to the one-child policy impose significant negative impacts on within-family succession. Dynastic management of family firms remains an important challenge for first-generation entrepreneurs in China.

Keywords: One-child policy; Family firms; Control; Dynastic management; Succession (search for similar items in EconPapers)
JEL-codes: G32 J12 Z19 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:33:y:2015:i:c:p:317-329

DOI: 10.1016/j.jcorpfin.2015.01.005

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