Do Managers In Chinese Family Firms Learn From The Market? Evidence From Chinese Private Placement

摘要

Recent empirical papers report managers' learning in merger and acquisition (M&A) decisions and family control is central in many countries. Does learning exist in family firms' financing decisions? Based on the announced private placements from Chinese family firms, we investigate the relation between managers' final decisions in family firms and the market reaction to the announcement. Our analysis suggests that a non-linear relation exists between managers' learning and family control. Managers generally learn from the market when making final decisions but family involvement can reduce this probability. Supplementary testing indicates that managers in family firms with low ownership are less likely to learn from the market than those in family firms with high ownership. Further analysis suggests that corporate governance can influence managers' learning. Family member' participation in purchasing the placed shares and serve as the top managers can make manager' learning less likely when the ownership is low. Independent directors in family firms don't play their due role in supervising the behavior of managers and large shareholders.