OWNERSHIP STRUCTURE AND PERFORMANCE IN FAMILY BUSINESSES AT EARLY DEVELOPMENTAL STAGE: EVIDENCE FROM CHINA

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Abstract

This paper explores the impact of ownership structure on performance of family businesses at its early developmental stage in a context of under-developed market environment. Using a survey data of 296 private family firms in Ningbo, China, we find both management and single largest shareholder’s ownership is positively related to firm’s performance. However, family’s shareholding does not have significant impact on performance. Further inquiry on firm’s willingness to give shares to managers who are not family members indicates that while nearly half of the firms are willing to provide shares to professional managers, weak corporate governance mechanism and under-developed market may discourage such practice.

Keywords: Ownership Structure, Firm Performance, Corporate Governance, Family Business, Agency Cost, Endogenous Ownership, Private Firms in China, Emerging Market

How to cite this paper: Qin, Z. & Deng, X. (2009). Ownership structure and performance in family businesses at early developmental stage: evidence from China. Corporate Ownership & Control, 7(1), 138-150. https://doi.org/10.22495/cocv7i1p13