Transforming the management and governance of private family firms: The role of venture capital

The Influence of Family Governance on the Value of Chinese Family Businesses: Signal Transmission Effect of Financial Performance

“…The first is the support effect. The governance model combining ownership and control of family enterprises makes more family members become managers, and the management of family members can help the company make correct decisions, improve decision efficiency, and reduce sunk costs (Gallucci et al 2020); at the same time, because family executives will formulate more robust corporate strategies and obtain long run stock returns (Villalonga and Amit 2006;Miller et al 2014;Chemmanur et al 2020), the governance model combining ownership and control promotes the improvement of corporate value and supports family enterprises (Davis and Harveston 2001;Fan et al 2017). However, some studies show that the integration of ownership and control governance model will make it difficult for enterprises to implement management policies, thus hindering the development of enterprises (Yao 2019).…”

Multi-Factor Collaborative Governance of Controlling Shareholder Expropriation Behavior in Emerging Economies: A Perspective of Double Principal-Agent Conflicts

“…W. Gao et al (2017) suggested that minority shareholders suffered fewer expropriations from family controlling shareholders when family firms had larger family ownership or less separation between family ownership and family control in China's family firms. Chemmanur et al (2021) showed that China's VC-backed private family firms were more likely to reduce the separation between family cash flow rights and control rights than non-VC-backed private family firms, and hence mitigate the family controlling shareholders' expropriation from minority shareholders and improve firm performance. However, Widyaningsih et al (2017) used 83 listed companies in Indonesia as a sample to show that cash flow right leverage did not affect corporate value, although there was some indication of expropriation action perpetrated by controlling shareholders.…”

Venture capital, control rights, and family enterprise growth

“…The degree of family control is different, and the degree of separation of the two rights will be different after venture capital intervention. The degree of control will affect the degree of separation of the two rights after venture capital financing of family enterprises [ 30 ]. In addition, if the concentration of control in family enterprises is high, or even if there is the phenomenon of a single dominant share, then family shareholders with relative or absolute control will find it easier to hollow out the enterprise through a pyramidal shareholding structure and infringe on the interests of small and medium-size investors [ 31 ].…”