“Ownership Structure and the Use of Nonfamily Executives in Family‐Dominated Listed Firms” by Professor Dean Xu
Professor Dean Xu
Department of Management
To investigate the use of nonfamily versus family executives in family‐dominated, publicly listed firms, we consider ownership concentration both at the firm level and within the dominant family. While the presence of family executives is supported by an institutional logic of family control, the use of nonfamily executives is guided by a shareholder logic. We suggest that higher levels of ownership held by the dominant family relative to other shareholders strengthen the family logic, whereas higher levels of ownership held by the largest family owner relative to other family members weaken the family logic in favor of the shareholder logic. Statistical results based on 2174 firm‐year observations, covering 635 family‐dominated Chinese entrepreneurial firms listed on the Shenzhen Stock Exchange, indicate that ownership by family increases, and ownership concentration in family decreases, the use of nonfamily CEO and nonfamily top management team.