Family involvement and R&D expenses in the context of weak property rights protection:an examination of non-state-owned listed companies in China

De Massis, Alfredo Vittorio and Ding, Shujun and Kotlar, Josip and Wu, Zhenyu (2018) Family involvement and R&D expenses in the context of weak property rights protection:an examination of non-state-owned listed companies in China. European Journal of Finance, 24 (16). pp. 1506-1527. ISSN 1351-847X

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Abstract

The impact of family involvement on firm behaviour is an issue of global interest, yet paradoxically few studies examine the behaviour of family firms in the unique socio-political environment of China. We investigate the cross-institutional generalizability of the behavioural agency model, emphasizing the non-economic goals of controlling families as a driver of unique yet predictable behaviours in Chinese family firms and examine the relationship between family involvement and the R&D expenses reported by these firms. We propose that in a context of weak property rights protection such as China’s, the opportunity for family owners to attain transgenerational control is subject to the additional risk of state predation. We consequently expect economic goals to prevail over family-centred non-economic goals in Chinese family firms and hypothesize that their reported R&D expenses increase with family involvement due to severe Type II agency problems. Moreover, we examine the effect of positive and negative performance feedback on this relationship. Longitudinal data from non-state-owned listed companies in China provide overall support for these contentions. We discuss the theoretical and practical implications of these findings.

Item Type:
Journal Article
Journal or Publication Title:
European Journal of Finance
Additional Information:
This is an Accepted Manuscript of an article published by Taylor & Francis in European Journal of Finance on 29/06/2017 available online: http://www.tandfonline.com/10.1080/1351847X.2016.1200994
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/aacsb/disciplinebasedresearch
Subjects:
ID Code:
80471
Deposited By:
Deposited On:
20 Jul 2016 15:00
Refereed?:
Yes
Published?:
Published
Last Modified:
05 Apr 2020 04:06