Publication Type

PhD Dissertation

Version

publishedVersion

Publication Date

5-2026

Abstract

Family businesses are an important pillar of global economic development. Currently, Chinese private enterprises are ushering in an unprecedented wave of intergenerational succession. At this critical historical juncture, "who" takes over and how the succession behavior affects firm performance have become core issues of common concern to academia and practice. Traditional principal-agent theory usually posits that introducing professional managers can break the limitations of family governance and improve corporate efficiency. However, Chinese family businesses are deeply rooted in specific institutional environments and cultural soils, where blood-based "relational trust" and socioemotional wealth (SEW) play irreplaceable roles in power transitions. Therefore, how differences in successor types actually affect the performance of Chinese family businesses, and what the underlying transmission mechanisms of governance power allocation are, urgently need to be clarified through large-sample empirical research.

Taking private family businesses listed on the A-share main boards of the Shanghai and Shenzhen Stock Exchanges from 2004 to 2025 as the research sample, this dissertation defines "chairman succession" as the core succession event. By matching data on governance structure, personal characteristics, financial statements, and market transactions from the CSMAR database, 1,093 firm-year unbalanced panel observations were ultimately obtained through rigorous screening. This study constructs a theoretical framework of "successor type—governance power allocation—firm performance" and employs two-way fixed effects models and the event study methodology. It systematically examines the differential impacts of "second-generation succession" versus "professional manager succession" on the firm's capital market reactions and medium-to-long-term operating performance, and profoundly analyzes the transmission mechanisms of actual control rights and ownership rights.The main conclusions of this research are as follows:

First, regarding operating outcomes, the long-term operating performance of second-generation succession is significantly superior to that of professional manager succession. This indicates that in the current Chinese business context, internal family succession can effectively reduce Type I agency costs and remains the optimal solution for maintaining competitive advantage. However, the capital market does not show significant preference differences for successor types in either the short or long term, reflecting information asymmetry and pricing lag among external investors regarding the complex internal power transitions of family businesses.

Second, the smooth transition of control and ownership rights is the core mediating mechanism for the performance advantage of second-generation succession. The study finds that second-generation succession is often accompanied by a significant increase in the actual controller's proportion of control and ownership rights; this "nominal and substantive" power transition effectively curbs internal friction and maintains strategic continuity. Meanwhile, the empirical results rule out their moderating effects, confirming that substantive empowerment is a "necessary path" for successors to exert their governance roles, rather than merely an external "boundary condition."

Third, macroeconomic shocks and firm size significantly affect market expectations and succession effectiveness. Heterogeneity analysis reveals that in the face of major external environmental shocks such as COVID-19, capital market expectations fundamentally reversed: the post-pandemic market significantly prefers second-generation succession, which features risk-resistant resilience and "patient capital." In addition, the marginal improvement effect of second-generation succession on operating performance is particularly pronounced in smaller-scale enterprises.

This dissertation expands the integrated application of socioemotional wealth theory and principal-agent theory in dynamic contexts, unpacks the "power allocation" black box during the succession process, and provides new micro-empirical evidence for understanding the governance advantages of Chinese family businesses in their intergenerational evolution. The research conclusions not only provide practical guidance for first-generation entrepreneurs to optimize succession planning and achieve the simultaneous handover of "responsibility, authority, and benefits," but also offer a decision-making reference for investors to rationally evaluate the value of succession events under different macroeconomic cycles.

Keywords

Family business succession, Second-generation succession, Professional manager, Firm performance

Degree Awarded

Doctor of Bus Admin (CKGSB)

Discipline

Entrepreneurial and Small Business Operations | Strategic Management Policy

Supervisor(s)

HUANG, Dashan

First Page

1

Last Page

120

Publisher

Singapore Management University

City or Country

Singapore

Copyright Owner and License

Author

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