One-child policy and family firms in China
Family business plays important roles to fuel economic growth in China. Due to the one-child policy, family firms are increasingly facing human capital constraints for within-family succession. Having only one heir decreases the probability of continuing family management by over 3%, reduces the probability of adult children working in family firms by 14%, and significantly decreases founders' expectations of having young heirs for succession. Having fewer children negatively affects founder's expectation to go public, reduces family firm's reinvestment rate and R&D. Overall, the evidence suggests that the human capital constraints due to the one-child policy impose significant negative impacts on within-family succession. Dynastic management of family firms remains an important challenge for first-generation entrepreneurs in China. (C) 2015 Elsevier B.V. All rights reserved.
One-child policy, Family firms, Control, Dynastic management, Succession
Journal of Corporate Finance
CAO, Jerry X.; CUMMING, Douglas; and WANG, Xiaoming.
One-child policy and family firms in China. (2015). Journal of Corporate Finance. 33, 317-329. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/4977