Prior literature focuses on the causes and effects of ownership concentration between significant blockholders and minority shareholders. Anecdotal evidence shows that it is also important to look at the causes and effects of ownership concentration within controlling families as family ownership can become diffused after generations. Family trust is a popular vehicle for holding family ownership. It allows a founder to concentrate firm ownership on a long-term basis, preventing control loss after he/she steps down. Family members can enjoy control benefits such as preservation of their family intangible assets. However, there is tradeoff. Family members cannot resolve their conflicts by acquiring and selling off shares among them, since they are no longer the legal owners of the shares. / Using a sample of 216 family firms listed on the Hong Kong Stock Exchange with time series data spanning 1990--2008, I investigate the causes and effects of ownership concentration by means of family trust. I fmd that when family control is important (when there exists a large amount of family intangibles), there is a higher propensity that family trust is used to concentrate ownership and secure control, provided that the cost of using it is low (small family size hence low family conflict). However, when there are more and more family members after generations, the benefit of preserving the intangibles may not be high enough to cover the cost of potential family conflict, leading to firm value loss. Moreover, the cost of using trust magnifies during difficult periods such as financial distress, economic downturn and leadership succession. Hence, firms with high potential family conflict have poorer performance during difficult time if family trust is used for holding the firm's controlling stake. Family trust also induces common pool problem. Family members tend to extract resources from the family firm as much and as early as possible, leading to higher payout and slower firm growth. / Leung, Siu Ching. / Adviser: Joseph P. H. Fan. / Source: Dissertation Abstracts International, Volume: 73-03, Section: A, page: . / Thesis (Ph.D.)--Chinese University of Hong Kong, 2010. / Includes bibliographical references (leaf 58). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. [Ann Arbor, MI] : ProQuest Information and Learning, [201-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Electronic reproduction. Ann Arbor, MI : ProQuest Information and Learning Company, [200-] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Abstract also in Chinese.
| Identifer | oai:union.ndltd.org:cuhk.edu.hk/oai:cuhk-dr:cuhk_344924 |
| Date | January 2010 |
| Contributors | Leung, Siu Ching., Chinese University of Hong Kong Graduate School. Division of Business Administration. |
| Source Sets | The Chinese University of Hong Kong |
| Language | English, Chinese |
| Detected Language | English |
| Type | Text, theses |
| Format | electronic resource, microform, microfiche, 1 online resource (vii, 87 leaves : ill. (some col.)) |
| Rights | Use of this resource is governed by the terms and conditions of the Creative Commons “Attribution-NonCommercial-NoDerivatives 4.0 International” License (http://creativecommons.org/licenses/by-nc-nd/4.0/) |
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