Family involvement and corporate risk-taking in China’s family firms

Family firms have played an increasingly prominent role in the rapid economicdevelopment in China. The literature on family firms has focused mainly on various aspects of US and European companies through performance comparisons with non-family firms and examinations of issues related to their control, ownership, and governance and management. This study attempts to develop a more nuanced approach to investigate how the type and extent of family involvement may influence corporate risk taking and firm performance by using data from about 1100 publicly listed family companies in China’s two stock exchanges during the 2013–2019 period. This area has been rarely studied, particularly in the context of an emerging economy such as China. This study contributes to the literature by providing a systematic investigation that focuses on uncovering the channel of corporate risk-taking by which family firm performance implications are assessed, thus bridging an important research gap for attaining better understanding of the key characteristics of family firms. The results from our study demonstrate that a reduction in family involvement raises corporate risk-taking and boosts firm performance. These results support the propositions of this thesis. Our findings also offer new insights for major stakeholders in their risk mitigation, governance practices, and ultimately firm performance.