Contract Enforcement and Family Control of Business: Evidence from China

Yi, Lu and Zhigang, Tao (2009): Contract Enforcement and Family Control of Business: Evidence from China. Forthcoming in: Journal of Comparative Economics

Abstract

Family control of business is prevalent in developing economies, and one of the leading theories suggests that it is a response to weak contract enforcement in such economies. In this paper, we investigate the impacts of contract enforcement on the degree of family control of business using a sample of China's private enterprises. It is found that weaker contract enforcement is associated with the higher degree of family control of business. Our results are robust to the control for omitted variables and reserve causality issues, to the adjustment for the sample attrition bias, to the use of a sub-sample, and to the inclusion of other explanations for the family control of business.

• Item Type: MPRA Paper
• Language: English
• Keywords: Family Control of Business, Contract Enforcement, China's Private Enterprises
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P37 - Legal Institutions ; Illegal Behavior; K - Law and Economics > K1 - Basic Areas of Law > K12 - Contract Law; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure

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