|Author:||Cheung, Wah Keung|
|Title:||Are family firms bad? : evidence from listed firms in Hong Kong|
|Subject:||Family-owned business enterprises -- China -- Hong Kong|
Corporations -- Valuation -- China -- Hong Kong
Stocks -- Prices -- China -- Hong Kong.
Hong Kong Polytechnic University -- Dissertations
|Department:||Faculty of Business|
|Pages:||v, 99 leaves ; 30 cm|
|Abstract:||Using panel data on 279 Hong Kong Stock Exchange-listed industrial companies, I examine the association between family ownership and performance with a comparative analysis of family versus non-family firms. My empirical evidence shows "decoupling' results between accounting and market performance. More specifically, family firms generate higher accounting performance but lower market valuation. In other words, the more profitable family firms' stocks are less preferred by market investors in Hong Kong. Interestingly, lower market valuation is somehow mitigated for those family firms with higher level of free cash flow and higher level of stock return volatility. Agency cost theory of free cash flow predicts that market investors would discount value of a firm holding high level of cash enabling firm managers to misuse of fund. Contrary to this prediction, my results suggest that market investors positively value family firms holding high level of free cash flow for good reasons. Furthermore, market investors become more comfortable for those family firms with higher stock return volatility during the period from 1999 till 2003 after the Asian Financial Crisis. Part of the reasons may be higher volatility offer greater opportunity for speculative gain in a shorter period of holding stocks, particularly relevant to the distinctive characteristics of stock market in Hong Kong with active participation of retail investors occupying 40% of cash market turnover during the period. Another reason may be due to lower bankruptcy risk for family firms which have much greater incentives to keep their own companies survive through generations.|
Files in This Item:
|b28256268.pdf||For All Users (off-campus access for PolyU Staff & Students only)||921.88 kB||Adobe PDF||View/Open|
As a bona fide Library user, I declare that:
- I will abide by the rules and legal ordinances governing copyright regarding the use of the Database.
- I will use the Database for the purpose of my research or private study only and not for circulation or further reproduction or any other purpose.
- I agree to indemnify and hold the University harmless from and against any loss, damage, cost, liability or expenses arising from copyright infringement or unauthorized usage.
By downloading any item(s) listed above, you acknowledge that you have read and understood the copyright undertaking as stated above, and agree to be bound by all of its terms.
Please use this identifier to cite or link to this item: