Non-family chair and corporate performance

Fuxiu Jiang (), Xiaojia Zheng () and Wei Tang ()
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Fuxiu Jiang: Renmin University of China
Xiaojia Zheng: Renmin University of China
Wei Tang: Renmin University of China

Frontiers of Business Research in China, 2018, vol. 12, issue 1, 1-30

Abstract: Abstract Using a sample of Chinese family firms listed from 1999 to 2014, we investigate the relationship between non-family leadership and firm performance. We find that firms with a non-family member as board chair perform significantly worse than firms whose chair belongs to the family. Moreover, we show that the underperformance of non-family-chair firms is more pronounced when firms are under weaker outside monitoring and when the controlling families care less about family business longevity. The negative effect of a non-family chair is robust to a variety of endogeneity tests. We also dismiss alternative explanations other than concern for reputation. Overall, our empirical results suggest that the social norms regarding family reputation are important in shaping the controlling shareholders’ expropriation incentives and firm performance.

Keywords: Non-family chair; Non-family leadership; Corporate performance; Family firms; Family reputation (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1186/s11782-018-0038-6

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