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Paving the way for children: Family firm succession and corporate philanthropy in China

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  • Wen He
  • Xin Yu

Abstract

We investigate whether internal succession in family firms motivates founders to engage in corporate philanthropy. We argue that founders who intend to pass control of the firm to their children are likely to prepare for the internal succession by building up family assets such as reputation and political connections through corporate philanthropy. Supporting our argument, we find that both the likelihood and the amount of philanthropic donations increase when listed family firms in China are in the internal succession process. The effect of successions on philanthropic donations is stronger for family firms that have political connections or are located in areas with stronger government influence in the local economy. The effect concentrates on family firms when heirs are young and inexperienced. When heirs are established, family firms actually make fewer philanthropic donations. Our results remain robust after addressing endogeneity issues.

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  • Wen He & Xin Yu, 2019. "Paving the way for children: Family firm succession and corporate philanthropy in China," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 46(9-10), pages 1237-1262, October.
    • Handle: RePEc:bla:jbfnac:v:46:y:2019:i:9-10:p:1237-1262
    DOI: 10.1111/jbfa.12402
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    Cited by:

    1. Ren, Xiaoyi & Liu, Xing, 2024. "Passing the dividend baton: Family succession and cash dividends," International Review of Financial Analysis, Elsevier, vol. 94(C).
    2. Jyun‐Ying Fu, 2023. "Customer concentration and corporate charitable donations: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 545-561, January.
    3. María Fernández-Muiños & Kevin Money & Anastasiya Saraeva & Irene Garnelo-Gomez & Luis Vázquez-Suárez, 2022. "Are the Sins of the Father the Sins of the Sons, but Not the Daughters? Exploring How Leadership Gender and Generation Impact the Corporate Social Responsibility of Franchise Firms," Sustainability, MDPI, vol. 14(14), pages 1-20, July.
    4. Zheng, Xiaojia & Zhu, Bing & Yang, Ge, 2023. "The soft landing: Does intrafamily succession matter for corporate risk-taking?," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    5. Douglas Cumming & Jun Hu & Huiying Wu, 2024. "Leaving a Legacy for my Children: The One-Child Policy Reform and Engagement in CSR Among Family Firms in China," Journal of Business Ethics, Springer, vol. 193(3), pages 611-632, September.
    6. Liu, Zixu & Zhou, Jianghua & Li, Jizhen, 2023. "How do family firms respond strategically to the digital transformation trend: Disclosing symbolic cues or making substantive changes?," Journal of Business Research, Elsevier, vol. 155(PA).

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