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Family control and corporate risk-taking in China: Does working capital strategy matter?

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  • Chai Bin-Feng
  • Sultan Sikandar Mirza
  • Tanveer Ahsan
  • Raheel Safdar
  • Amjad Iqbal
  • Mustansar Hayat

Abstract

This study uses the data of A-share listed family firms during the period 2010-18 and employs multiple regression analysis to verify the role of family control and working capital strategy for corporate risk-taking in China. This study also explores the regulatory role of family control in the relationship between working capital strategy and corporate risk-taking of Chinese listed family firms. Results show that greater family control encourages risk-taking behavior in Chinese firms whereas conservative working capital strategy diminishes corporate risk-taking. The results also suggest a regulatory role for family control on the effects of working capital strategy for family firms’ risk-taking behavior. Strong family control weakens the negative association between working capital conservatism and corporate risk-taking. This study's findings may help managers of family firms to adjust risk-taking behavior in response to changing working capital strategy. The results are robust to different measures of corporate risk-taking and working capital strategy.

Suggested Citation

  • Chai Bin-Feng & Sultan Sikandar Mirza & Tanveer Ahsan & Raheel Safdar & Amjad Iqbal & Mustansar Hayat, 2022. "Family control and corporate risk-taking in China: Does working capital strategy matter?," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 4280-4299, December.
    • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:4280-4299
    DOI: 10.1080/1331677X.2021.2013270
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    Cited by:

    1. Hong, Liu & Jain, Bharat A. & Shao, Yingying, 2024. "Family firm governance and working capital management policy," International Review of Financial Analysis, Elsevier, vol. 95(PB).

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