Does Family Business Succession Influence Corporate Misconduct?

Abstract

As a necessary part of the self-renewal of family businesses, does family business succession influence corporate misconduct? Based on data from 1,273 company-years in Chinese listed family businesses from 2003 to 2019, this study considers the starting point of family business succession as the time when the second-generation successor becomes the chairman. The results indicate that after family businesses enter succession implementation, corporate misconduct will be reduced. This is because the education level, overseas experience, and sense of social responsibility of the second generation are higher than those of the first generation. Moreover, we find that the “family-family” succession category can significantly reduce corporate misconduct in comparison with the “nonfamily-family” succession category. Further, small family firms show less misconduct after succession compared to large family firms. This study contributes to the literature on family business succession and corporate management, and is of great significance to family business management.