Capital flight for family? Exploring the moderating effects of social connections on capital outflow of family business

Bao Wu, Qi Wang, Chevy-Hanqing Fang, Fu-Sheng Tsai and Yuanze Xia

Journal of International Financial Markets, Institutions and Money, 2022, vol. 77, issue C

Abstract: Capital flight amounts to a substantial proportion of outward capital flow in emerging markets. This study, using a large sample of 2711 Chinese private firms, examines the relationship between family involvement and capital flight of family businesses. The results show that family involvement is positively associated with capital flight. And political connection weakens the positive effect of family involvement on capital flight. Further, our study investigates the moderating effects of political connection and local connection and their context-dependence on business environment. Generally, political connection weakens the positive effect of family involvement on capital flight. And such moderating effect of political connection is significantly negative in high-quality business environments and insignificant in low-quality business environments. More interestingly, moderating effect of local connection that is significantly negative in high-quality business environments turns into significantly positive in low-quality business environments. The effect of family involvement on OFDI and similar moderating effects of political connection and local connection are examined as comparisons. There are divergences of such effects in the case of OFDI and capital flight.

Keywords: Capital flight; Family firm; Local connection; Political connection; Business environment (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1042443121001955
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:77:y:2022:i:c:s1042443121001955

DOI: 10.1016/j.intfin.2021.101491

Access Statistics for this article

Journal of International Financial Markets, Institutions and Money is currently edited by I. Mathur and C. J. Neely

More articles in Journal of International Financial Markets, Institutions and Money from Elsevier
Bibliographic data for series maintained by Catherine Liu ().