ARTICLE
Excess control of family board seats and corporate innovation
Suyun Chen,
Zongze Li,
Lingling Chu,
Qingzi Cao,
Suyun Chen
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Search for more papers by this authorCorresponding Author
Zongze Li
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Correspondence
Zongze Li, College of Economics and Management, Henan Agricultural University, No. 15, Longzi Lake College Park, Zhengzhou Eastern New District, Zhengzhou 450046, China. Email: [email protected]
Search for more papers by this authorLingling Chu
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Search for more papers by this authorQingzi Cao
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Search for more papers by this authorSuyun Chen,
Zongze Li,
Lingling Chu,
Qingzi Cao,
Suyun Chen
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Search for more papers by this authorCorresponding Author
Zongze Li
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Correspondence
Zongze Li, College of Economics and Management, Henan Agricultural University, No. 15, Longzi Lake College Park, Zhengzhou Eastern New District, Zhengzhou 450046, China. Email: [email protected]
Search for more papers by this authorLingling Chu
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Search for more papers by this authorQingzi Cao
College of Economics and Management, Henan Agricultural University, Zhengzhou, China
Search for more papers by this authorAbstract
We examine the impact of board-level control on corporate innovation in family firms. We find that excess control of family board seats (ECFBS) is negatively correlated with innovation investment, innovation output and innovation efficiency. Our findings suggest that ECFBS exacerbates type II agency problems. Mechanistic analyses show that ECFBS reduces firms’ risk-taking level, increases their financing constraints and damages channels for acquiring innovative professional knowledge. We also observe that effect of ECFBS on innovation is associated with family origin, familiarization time and family management characteristics. Our findings should be of interest to family firm manager investors and lenders who are interested in family governance mechanisms.
CONFLICT OF INTEREST STATEMENT
The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.
Open Research
DATA AVAILABILITY STATEMENT
The data that support the findings of this study are available from the corresponding author upon reasonable request.
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