Rights statement: 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
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Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Family involvement and R&D expenses in the context of weak property rights protection
T2 - an examination of non-state-owned listed companies in China
AU - De Massis, Alfredo Vittorio
AU - Ding, Shujun
AU - Kotlar, Josip
AU - Wu, Zhenyu
N1 - 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
PY - 2018
Y1 - 2018
N2 - 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.
AB - 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.
KW - family firms
KW - R&D expenses
KW - family-centred goals
KW - property rights
KW - China
U2 - 10.1080/1351847X.2016.1200994
DO - 10.1080/1351847X.2016.1200994
M3 - Journal article
VL - 24
SP - 1506
EP - 1527
JO - European Journal of Finance
JF - European Journal of Finance
SN - 1351-847X
IS - 16
ER -