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Family CEO and information disclosure: Evidence from China

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  • Xu, Jingjing
  • Zhang, Yan

Abstract

This study investigates the relationship between family firms’ CEO type and the amount of firm-specific information incorporated into stock prices. Using manually collected data from Chinese Small and Medium Enterprises (SME) Board, we find that stock price synchronicity is about 25% lower if the CEO is a member of the owning family, implying that more information is disclosed in these firms. This CEO impact is much stronger when firms have indirect shareholding structures and when the firm's founder does not serve as the chairman or CEO. These results suggest that family CEOs tend to mitigate the expropriation concerns of outside shareholders by disclosing more information to the market in China.

Suggested Citation

  • Xu, Jingjing & Zhang, Yan, 2018. "Family CEO and information disclosure: Evidence from China," Finance Research Letters, Elsevier, vol. 26(C), pages 169-176.
    • Handle: RePEc:eee:finlet:v:26:y:2018:i:c:p:169-176
    DOI: 10.1016/j.frl.2018.01.002
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    Cited by:

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    2. Carmen Díaz-Roldán & María del Carmen Ramos-Herrera, 2021. "Innovations and ICT: Do They Favour Economic Growth and Environmental Quality?," Energies, MDPI, vol. 14(5), pages 1-17, March.
    3. Byungjun Yu & Saixing Zeng & Hongquan Chen & Xiaohua Meng & Chiming Tam, 2021. "Doing more and doing better are two different entities: Different patterns of family control and environmental performance," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 1-20, January.
    4. Barka, Zeineb & Benkraiem, Ramzi & Hamza, Taher & Lakhal, Faten, 2022. "How does family control affect stock price synchronicity?," Finance Research Letters, Elsevier, vol. 49(C).
    5. Waldkirch, Matthias, 2020. "Non-family CEOs in family firms: Spotting gaps and challenging assumptions for a future research agenda," Journal of Family Business Strategy, Elsevier, vol. 11(1).
    6. Plaksina, Yulia & Gallagher, Liam & Dowling, Michael, 2019. "CEO social status and M&A decision making," International Review of Financial Analysis, Elsevier, vol. 64(C), pages 282-300.
    7. Congbo Chen & Azhong Ye, 2021. "Threshold Effect of the Internet on Regional Innovation in China," Sustainability, MDPI, vol. 13(19), pages 1-13, September.
    8. Olusegun Sadiq & Dieu Hack-Polay & Ted Fuller & Mahfuzur Rahman, 2022. "Barriers to the Effective Integration of Developed ICT for SMEs in Rural NIGERIA," Businesses, MDPI, vol. 2(4), pages 1-26, November.
    9. Yiran Wang & Zhijian Cai & Jie Wang, 2022. "The Impact of Digital Technology Use on Passive Entrepreneurial Exit in Rural Households: Empirical Evidence from China," Sustainability, MDPI, vol. 14(17), pages 1-18, August.
    10. Gao, Kaijuan & Lin, Wanfa & Yang, Li & Chan, Kam C., 2020. "The impact of analyst coverage and stock price synchronicity: Evidence from brokerage mergers and closures✰," Finance Research Letters, Elsevier, vol. 33(C).
    11. Guo, Jiaqi & Li, Changhong & Jiao, Wenting & Wang, Zhan, 2021. "Marketisation, information transparency and the cost of equity for family firms," Finance Research Letters, Elsevier, vol. 38(C).

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    More about this item

    Keywords

    Family firm; Family-CEO; Information disclosure; Stock price synchronicity;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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