IS BLOOD THICKER THAN SOCIAL CAPITAL?-FAMILY CONTROL AND VERTICAL INTERLOCKS IN CHINESE BUSINESS GROUPS

摘要

We investigate risk of appropriation of minority shareholders in listed firms affiliated with family owned business groups (pyramids).We investigate whether such risks are greater for family pyramids than for state owned ditto.We furthermore examine how a) family ties between listed firm chairmen and business group owners and b) vertical managerial interlocks between listed and apex firm affect risk of appropriation.We also investigate the moderating effects of institutional development on these two different types of managerial ties.We find that both state control and vertical interlocks tend to reduce risk of appropriation.Further,our results show that family managerial ties do not affect appropriation risk directly,but do influence the effect of vertical interlocks,in that vertical interlocks have a negative and significant impact on related guarantee only for firms with non-family chairman.In addition,we find that the effect of both vertical interlocks and family ties are moderated by institutional development.