Does Professional Management of a Family Business Affect Its Financing Channels? Evidence from China

ABSTRACT

Despite developing rapidly in the Chinese market, family firms still face financing issues. This article uses Chinese family firms that went public from 2007 to 2019 as a sample and empirically examines whether professional management of a family business affects its financing channels. Our results indicate that the degree of professional management has a significantly negative impact on the internal financing rate and a significantly positive effect on increasing the external financing rate. In addition, industry competition intensifies the positive correlation between the degree of professional management and external financing.

KEYWORDS:

• Family business
• financing channels
• professional management degree

Acknowledgments

We appreciate very much the financial supports from the National Social Science Foundation of China (Grant No.18BGL073; No. 19BGL056), National Natural Science Foundation of China (Grant No. 71902082). We are also very grateful to the anonymous referees for their insightful comments and helpful suggestions to improve this paper.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by the National Social Science Foundation of China [Grant No.18BGL073; No. 19BGL056]; National Natural Science Foundation of China [Grant No. 71902082].