Int. J. Financial Stud. 2014, 2(1), 103-121; doi:10.3390/ijfs2010103
Article

Family-Concentrated Ownership in Chinese PLCs: Does Ownership Concentration Always Enhance Corporate Value?

1,* email and 2email
Received: 5 December 2013; in revised form: 11 February 2014 / Accepted: 14 February 2014 / Published: 28 February 2014
(This article belongs to the Special Issue Performance and Behavior of Family Firms)
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract: In this paper we investigate the relationship between family ownership structure and corporate value across a sample of 1314 firm-year observations of China’s family publicly listed companies (PLCs), from 2004 to 2008. We find a significant inverse-U-shaped relationship between the controlling family’s ultimate cash-flow rights and corporate value; as measured by Tobin’s Q. That is, as family-ownership concentration increases, corporate value first increases and then decreases. This finding refreshes our understanding of the relationship between family-ownership concentration and corporate value in emerging economies such as found in China. We corroborate prior findings that when controlling families hold excess control over cash-flow rights, corporate value is significantly lowered, while multiple large shareholders structure is significantly associated with higher corporate value. In addition; board independence is found to significantly improve corporate value in the context of family-concentrated ownership. We also test for potential endogeneity between family ownership and corporate value and find our results to be robust.
Keywords: China; corporate value; family concentrated ownership; family firms; ultimate ownership structure
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MDPI and ACS Style

Luo, J.-H.; Liu, H. Family-Concentrated Ownership in Chinese PLCs: Does Ownership Concentration Always Enhance Corporate Value? Int. J. Financial Stud. 2014, 2, 103-121.

AMA Style

Luo J-H, Liu H. Family-Concentrated Ownership in Chinese PLCs: Does Ownership Concentration Always Enhance Corporate Value? International Journal of Financial Studies. 2014; 2(1):103-121.

Chicago/Turabian Style

Luo, Jin-Hui; Liu, Heng. 2014. "Family-Concentrated Ownership in Chinese PLCs: Does Ownership Concentration Always Enhance Corporate Value?" Int. J. Financial Stud. 2, no. 1: 103-121.

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