Family Exit and Firms' Investment Efficiency Based on Dynamic Changes: Evidence from Chinese Family Firms.

This study provides evidence about the influence of family exit on firms' investment efficiency using a sample of 6,842 firm-year observations of Chinese family (and family-exiting) firms from 2003 to 2019. Based on panel data, we find that family exit has negative effects on firms' investment efficiency. Further analysis also indicates that family exit can decrease firms' investment efficiency under low investment levels and increase their investment efficiency under high investment levels. We test the market reaction when family members are punished by the SEC and find that the market's reaction is significantly negative, which implies that the capital market cares about family managers and controllers.