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Do family CEOs benefit investment efficiency when they face uncertainty? Evidence from chinese family firms

Weiwei Gao (School of Management, Xi’an Jiaotong University, Xi’an, China)
Wanli Li (School of Management, Xi’an Jiaotong University, Xi’an, China and School of Accounting, Shanghai University of International Business and Economics, Shanghai, China)
Zhen Huang (School of Management, Xi’an Jiaotong University School of Management, Xi’an, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 5 June 2017




This paper aims to investigate whether family CEOs benefit investment efficiency under uncertainty with Chinese family firms and to test the moderating effect of ownership structure, including family ownership, the separation of family control from family ownership and the multiple large shareholder structure.


Fixed-effects models are designed for a sample of 5,734 firm-year observations for Chinese family firms from 2009 to 2014.


The results show that investment efficiency is low under uncertainty, and having family CEOs can reduce this negative relationship. Further analysis reveals that for firms with family CEOs, the negative effect of uncertainty on investment efficiency is weaker when the family has higher ownership, when family control is less separated from family ownership, or when family firms have multiple large shareholder structures.

Research limitations/implications

The authors do not distinguish founder-CEOs and descendant-CEOs. Most of Chinese family firms are still managed by founders, so the authors cannot explore the generation effect although different generations manage firms differently. Because family succession is becoming a more and more important problem in China, further research may be able to explore the generation effect.


This paper suggests that in emerging economies with weak investor protection, outside minority shareholders can avoid expropriation from family owners by investing in firms with large family ownership, little separation of family control from ownership or multiple large shareholder structure. In addition, policymakers can encourage institutional investors to participate in family business to improve corporate governance.


Drawing on both Type I and Type II agency theory perspectives, the authors argue that although family CEOs can generally benefit firms’ investment efficiency, the benefits vary with firms’ ownership structure. In other words, family CEOs are not absolute agents or stewards but some extent of combination of both.



This study is funded by the Chinese Social Sciences Research Project of Ministry of Education [no. 14XGC790001].


Gao, W., Li, W. and Huang, Z. (2017), "Do family CEOs benefit investment efficiency when they face uncertainty? Evidence from chinese family firms", Chinese Management Studies, Vol. 11 No. 2, pp. 248-269.



Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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