# The Investigation about the Heritage over Generations for the Family Enterprise and Firms Financialization Process

Authors: Hui Liu
Journal: Advances in Multimedia
 (2022)

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## Abstract

From the reform and opening up to the present, family businesses have become an important pillar of my country’s national economy and the most essential push power to the advancement of the Economy of China. At present, more and more family firms come to the top of the hill on the heritage over generations. Meanwhile, the right of owning the firm has changed from the inventor or creators to the descendant ones and it is a must for them to inherit to the advancement. The intergenerational inheritance of family businesses has also had a certain impact on the global economy. At present, China’s real economy is in a critical period of transformation and upgrading and industrial upgrading. At the same time, the weakening of the real economy. On the contrary, with the increasing popularity and deepening development of the financial industry, a large number of non-financial companies have turned their investment goals to the financial industry to obtain high returns. Of course, the company’s financialization must have its positive side, and naturally, there is also a negative side. There are opportunities for enterprises to obtain high profits, but there are also great investment and management risks. Therefore, before financial investment, we should also fully consider the business risks borne by family enterprises. In addition, because of the particularity of the ownership of family enterprises in China, there are great differences in many aspects compared with other family enterprises and non-family enterprises abroad and internationally. Therefore, there may be some differences in the impact of corporate financialization on them. This study will further study and analyze the internal factors and modes of family business intergenerational inheritance leading to enterprise financialization based on family emotional wealth theory and representative theory, combined with the process of family business intergenerational inheritance and family business financialization. In the theoretical part, it combs the literature, including the definition of intergenerational inheritance, influencing factors, and inheritance content. Through the empirical test of the intermediary effect, this paper analyzes and studies the direct impact and intermediary effect of the proportion of productive investment on the intermediary effect; the role of family business identity (most important for children), re measure explanatory variables, and use PSM, propensity score matching method to test the robustness of regression results.


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## Body

## 1. Introduction

The family firms have been the most ancient one system and form of the business mode and have shown the tough power in the competition. It has played an important role in our life [1]. In my country, more than 95% of private enterprises are controlled or managed by families. The private economy is a unique existence in my country, and it is the most dynamic and potential factor. It has become the basic force for “stabilizing growth, adjusting structure, and protecting people’s livelihood.” The private firms have advanced developed which has occupied half of the entity of Chinese Economy [2]. According to the “2012 Private Economic Development Situation Analysis Report” issued by the All-China Federation of Industry and Commerce, the number of registered private enterprises in my country has exceeded 10 million, the registered capital of private companies has reached 29.8 trillion yuan, and the average registered capital of each household has reached 2.813 million yuan. The scale and strength of enterprises have continued to increase, and their ability to absorb employment has become more prominent, contributing more than 90% to new employment, more than 50% to taxation and fixed asset investment, and more than 60% to GDP. There is no doubt that family businesses push the advancement of the Chinese economy and also are the great power of the progress of society. It will decide the life of citizens and fate of our country [3].With the increasing age of the family founder, Chinese family enterprises are facing many difficulties. In order to meet the needs of economic development, many enterprises need to accelerate their business models. Therefore, most enterprises come here to reform and make scientific progress [4]. At this time, intergenerational entrepreneurship theory provides some suggestions for the development of enterprises: due to the huge differences in growth background and educational experience between family heirs and founders, they will not inherit their parents’ original career. Instead, they choose to explore new areas. However, whether this intergenerational entrepreneurial approach can promote the development and smooth inheritance of family businesses is still uncertain, which is worthy of our study [5]. The good development of Internet companies has brought more and more changes and updates, and the financial sector is booming. According to the statistical yearbook of the National Bureau of statistics, from 2002 to 2018, the scale of China’s financial capital reached 20.7 billion yuan, and the growth rate reached the highest value in 2009. In this process, a large number of physical enterprises poured into the financial industry. Private enterprises are also a good choice. Family enterprises will have financial direction, which is a world trend. However, unlike others, they have more emotional wealth, so they will consider other factors unrelated to finance in the future. In terms of literature, the survey shows that family businesses will become targets [6]. Therefore, this paper selects 488 family businesses facing intergenerational transmission from 2008 to 2018 as the research object, as well as the influencing factors between intergenerational enterprises [7].


## 2. State of the Art

### 2.1. Concepts and Theories Related to Intergenerational Inheritance of Family Businesses

Family business is an important form of enterprise but also has the common characteristics of enterprises. But its existing family attribute is its particularity [8, 9]. The academic circles define the meaning of family management as follows: first, the essence of family management is family type; secondly, the family business actually refers to the family members who control the main equity of the company. Third, family enterprises actually refer to family enterprises [10]. In other words, all directors of the enterprise are family members. They control the ownership of the enterprise and formulate and implement enterprise policies through group members with emotional connections. The next generation is responsible; in terms of enterprise procedures, it should be composed of two generations of family members. Family business is an enterprise that can improve its income and decision-making through the coordination between two family members [11].To sum up, there is no consensus on the definition of the concept of family business, and there are some differences in interpretation. In a sense, because the oldest way of survival in human society is family enterprises, strictly speaking, every enterprise at this stage is a family enterprise, which basically has a certain family attribute. No one exists alone; there must be his blood. Based on the characteristics of Chinese family culture, this paper tends to define family business as an enterprise with inheritance behavior in the family.Family businesses have experienced changes from generation to generation in the process of growth. According to the statistics of Oriental Wealth in 2020, 30% of family businesses have successfully completed the second-generation inheritance, while less than 10% of family businesses have completed the third-generation inheritance. Only 3% of family businesses manage four heritages. Figure1 shows the four-stage inheritance model of family business [12].Figure 1
Four-stage inheritance model.In the long-term development of Chinese family enterprises, the first problem to be solved is the inheritance of their own power and assets. Some researchers clearly pointed out that if family enterprises want to occupy a more important market position in the fierce market competition, they need to pay attention to the inheritance of family enterprises. Through the aspects of economy and management, some researchers have studied the creation and inheritance of family businesses related to complex systems such as companies, families, and ownership. The model is constructed according to the life cycle of a typical family business and is used to analyze the inheritance and transfer of entrepreneurs and successors, focusing on the main problems of family business [13].Family succession refers to the process in which the founder of a company transfers the ownership and management of the company to his family heirs. Generally speaking, there are two forms of family inheritance: one is the transfer of corporate ownership and management rights [14]. The founder of the company needs to clarify the successor and the schedule to ensure that the successor can proceed smoothly. Secondly, enterprise management authority focuses on the impact of enterprise succession and the issue of enterprise succession candidates. What is the final management effect and how will the successor be responsible for the consequences of corporate governance [15].


### 2.2. Definition and Measurement of Corporate Financialization

This topic is one of the more important topics. At present, from the perspective of behavior, its meaning is not clear. Enterprise financialization refers to the fact that enterprises invest more funds in the financial investment field of non-production and operation [16]. As a result, when the company is financialized, there will be no production activities. This paper believes that enterprise financialization means that enterprises become the endogenous force of the capital market for the first time through reorganization and listing. As a bridge between listed companies and finance, enterprises have a profound impact on the capital flow and financial policies of the whole society.First of all, from the perspective of asset allocation structure, Shapiro pointed out that since non-financial companies have financial wealth, if they operate, they are called financial companies. Define enterprise financialization through enterprise behavior. If non-financial enterprises enter the financial market more frequently, their holdings of financial assets will also be relatively high, indicating that enterprises are at a high level of financialization. Figure2 shows the input-output operation mode of the enterprise [17]..Figure 2
Enterprise input-output-operation model.Secondly, from the perspective of profit structure, use the ratio of enterprise profit sources to define enterprise financialization. The company is mainly related to such investments or significantly ahead of the main business profits. In addition, in the long run, the profit structure dominated by fiscal revenue can often reflect its investment distribution structure, that is, the input of productive business is often excluded. Therefore, the risk level faced by enterprises is often very high, which is not conducive to the development of enterprises [18].The company’s financialization can be identified and measured by the following three methods: first, the company’s financialization is measured according to the company’s asset subject. By viewing the data in the financial statements, you can measure the degree of financialization of an enterprise. However, this measure can only be used by companies that disclose complete and comprehensive financial statements. Obviously, this measure of corporate financing level is only applicable to listed companies. Secondly, enterprise financialization is measured according to the way in which enterprise profits are generated, when studying the financialization of Chinese enterprises [19]. The ratio of financial income to net profit is used to measure the degree of financialization of enterprises, and the financialization level of China is compared with that of foreign developed countries. They found that there was still a big gap between them. Third, enterprise financialization is measured according to the relationship between enterprise and enterprise finance. Figure 3 shows the existing and planned financing sources of the family business. It can be seen from the figure that the financial investment in family enterprises is mainly financed by operating cash flow and bank loans, followed by internal capital, that is, family capital, then capital markets, such as bond issuance, and finally lease contracts [10].Figure 3
Existing and planned sources of financing for family businesses.


## 2.1. Concepts and Theories Related to Intergenerational Inheritance of Family Businesses

Family business is an important form of enterprise but also has the common characteristics of enterprises. But its existing family attribute is its particularity [8, 9]. The academic circles define the meaning of family management as follows: first, the essence of family management is family type; secondly, the family business actually refers to the family members who control the main equity of the company. Third, family enterprises actually refer to family enterprises [10]. In other words, all directors of the enterprise are family members. They control the ownership of the enterprise and formulate and implement enterprise policies through group members with emotional connections. The next generation is responsible; in terms of enterprise procedures, it should be composed of two generations of family members. Family business is an enterprise that can improve its income and decision-making through the coordination between two family members [11].To sum up, there is no consensus on the definition of the concept of family business, and there are some differences in interpretation. In a sense, because the oldest way of survival in human society is family enterprises, strictly speaking, every enterprise at this stage is a family enterprise, which basically has a certain family attribute. No one exists alone; there must be his blood. Based on the characteristics of Chinese family culture, this paper tends to define family business as an enterprise with inheritance behavior in the family.Family businesses have experienced changes from generation to generation in the process of growth. According to the statistics of Oriental Wealth in 2020, 30% of family businesses have successfully completed the second-generation inheritance, while less than 10% of family businesses have completed the third-generation inheritance. Only 3% of family businesses manage four heritages. Figure1 shows the four-stage inheritance model of family business [12].Figure 1
Four-stage inheritance model.In the long-term development of Chinese family enterprises, the first problem to be solved is the inheritance of their own power and assets. Some researchers clearly pointed out that if family enterprises want to occupy a more important market position in the fierce market competition, they need to pay attention to the inheritance of family enterprises. Through the aspects of economy and management, some researchers have studied the creation and inheritance of family businesses related to complex systems such as companies, families, and ownership. The model is constructed according to the life cycle of a typical family business and is used to analyze the inheritance and transfer of entrepreneurs and successors, focusing on the main problems of family business [13].Family succession refers to the process in which the founder of a company transfers the ownership and management of the company to his family heirs. Generally speaking, there are two forms of family inheritance: one is the transfer of corporate ownership and management rights [14]. The founder of the company needs to clarify the successor and the schedule to ensure that the successor can proceed smoothly. Secondly, enterprise management authority focuses on the impact of enterprise succession and the issue of enterprise succession candidates. What is the final management effect and how will the successor be responsible for the consequences of corporate governance [15].


## 2.2. Definition and Measurement of Corporate Financialization

This topic is one of the more important topics. At present, from the perspective of behavior, its meaning is not clear. Enterprise financialization refers to the fact that enterprises invest more funds in the financial investment field of non-production and operation [16]. As a result, when the company is financialized, there will be no production activities. This paper believes that enterprise financialization means that enterprises become the endogenous force of the capital market for the first time through reorganization and listing. As a bridge between listed companies and finance, enterprises have a profound impact on the capital flow and financial policies of the whole society.First of all, from the perspective of asset allocation structure, Shapiro pointed out that since non-financial companies have financial wealth, if they operate, they are called financial companies. Define enterprise financialization through enterprise behavior. If non-financial enterprises enter the financial market more frequently, their holdings of financial assets will also be relatively high, indicating that enterprises are at a high level of financialization. Figure2 shows the input-output operation mode of the enterprise [17]..Figure 2
Enterprise input-output-operation model.Secondly, from the perspective of profit structure, use the ratio of enterprise profit sources to define enterprise financialization. The company is mainly related to such investments or significantly ahead of the main business profits. In addition, in the long run, the profit structure dominated by fiscal revenue can often reflect its investment distribution structure, that is, the input of productive business is often excluded. Therefore, the risk level faced by enterprises is often very high, which is not conducive to the development of enterprises [18].The company’s financialization can be identified and measured by the following three methods: first, the company’s financialization is measured according to the company’s asset subject. By viewing the data in the financial statements, you can measure the degree of financialization of an enterprise. However, this measure can only be used by companies that disclose complete and comprehensive financial statements. Obviously, this measure of corporate financing level is only applicable to listed companies. Secondly, enterprise financialization is measured according to the way in which enterprise profits are generated, when studying the financialization of Chinese enterprises [19]. The ratio of financial income to net profit is used to measure the degree of financialization of enterprises, and the financialization level of China is compared with that of foreign developed countries. They found that there was still a big gap between them. Third, enterprise financialization is measured according to the relationship between enterprise and enterprise finance. Figure 3 shows the existing and planned financing sources of the family business. It can be seen from the figure that the financial investment in family enterprises is mainly financed by operating cash flow and bank loans, followed by internal capital, that is, family capital, then capital markets, such as bond issuance, and finally lease contracts [10].Figure 3
Existing and planned sources of financing for family businesses.


## 3. Methodology

### 3.1. Model Setting to Test the Impact of Intergenerational Inheritance on Corporate Financialization

This paper establishes a model to test the hypotheses Hla and Hlb to test impact. If the number is bigger than 0, it implies such hypothesis Hlb above is established, then it implies such business; the regression coefficient (a1) of the intergenerational inheritance (Jc) is less than 0. It shows that the hypothesis Hla above has established the family enterprises, wherei is the company and t is the year [20].
(1)Fini,t=α0+α1Ji,t+α2Gi,t+α3Levi,t+α4Sizei,t+α5Rti,t+α6Roei,t.


### 3.2. Test of Mediating and Moderating Effects

This paper uses the productive investment ratio as the transmission mechanism of the mediating effect: “intergenerational inheritance→productive investment ratio→family business financialization.” The specific formula is as follows:(2)Y=cX+e1,M=aX+e2,Y=cX′+bM+e3.At the same time, this paper constructs models (3), (4), and (5) to test this action path.
(3)Fini,t=α0+α1Ji,t+αControli,t+∑Year+∑Industry+εi,t,(4)Inputi,t=β0+β1Jci,t+βControli,t+∑Year+∑Industry+εi,t,(5)Fini,t=γ0+γ1Jci,t+γ2Inputi,t+χControli,t+∑Year+∑Industry+εi,t.The specific operations are as follows: first: decentralize the variables studied in this paper and then use the “c_” variable to represent the centralized variables. Second: use the model to test it and observe the coefficient a1; if the coefficient a1 is significant, then you can continue to test the model after that. If the coefficient a1 is not significant, then there is no mediation effect, and the next test is not needed [21].. Third: use the model to test the intergenerational inheritance The impact on the productive investment ratio, focus on the coefficient β1; use the model to verify the impact of intergenerational inheritance and the productive investment ratio on the financialization of family businesses, focusing on y1 and yr. If the coefficient β1 is significant, then when the coefficient rz and when both y1 are significant, it means that the productive investment ratio plays a partial mediating effect [22].This paper tests the previous hypotheses H3a and H3b and builds a model to analyze the moderating effect of family business second-generation identity (eldest son, eldest daughter) on the impact of intergenerational inheritance on family business financialization. Mainly analyzes the interaction term JcxSon coefficientμ1 of intergenerational inheritance and family business second-generation identity (eldest son, eldest daughter) When μ2 is greater than 0, it means that the second-generation identity (eldest son, eldest daughter) of family business will weaken the effect of intergenerational inheritance on family business. The negative impact of financialization means that hypothesis H3a holds. When μ is 0, it means that (eldest son, eldest daughter) such impact for corporate so it is assumed it is established. For such company will be like:
(6)Fini,t=μ0+μ1Jci,t+μ2Jci,t×Soni,t+μ3Soni,t.This paper tests the previous hypotheses H4a and H4b and builds a model. A comprehensive inheritance model based on three dimensions of individual, family, and business needs is shown in Figure4.Figure 4
Comprehensive inheritance model.Mainly analyze the interaction term JcxRep regression coefficientθ of intergenerational inheritance and family business heir reputation, when θ2 is less than 0, indicating the reputation of the heirs, that will be, assuming that H4a is established and H4b is not established. Conversely, if θ2 is significantly greater and this proves assuming that H4b holds, and assuming that H4a does not hold such company.
(7)Fini,t=θ0+θ1Jci,t+θ2Jci,t×Repi,t+θ3Repi,t+θControli,t.This paper tests the previous hypotheses H5a and H5b and builds a model. It mainly analyzes the interaction term JcxPc regression coefficientφ2 of intergenerational inheritance and political connection. When φ2 is greater than 0, it indicates that the political connection of family business can weaken the negative impact of intergenerational inheritance on the financialization of family business, which verifies the hypothesis H5b. When φ2 is less than 0, it means that the political connection of family business heirs will enhance the negative impact of intergenerational inheritance on the financialization of family business, which verifies hypothesis H5a.
(8)Fini,t=ϕ0+ϕ1Jci,t+ϕ2Jci,t×Pci,t+ϕ3Pci,t+ϕControli,t.


## 3.1. Model Setting to Test the Impact of Intergenerational Inheritance on Corporate Financialization

This paper establishes a model to test the hypotheses Hla and Hlb to test impact. If the number is bigger than 0, it implies such hypothesis Hlb above is established, then it implies such business; the regression coefficient (a1) of the intergenerational inheritance (Jc) is less than 0. It shows that the hypothesis Hla above has established the family enterprises, wherei is the company and t is the year [20].
(1)Fini,t=α0+α1Ji,t+α2Gi,t+α3Levi,t+α4Sizei,t+α5Rti,t+α6Roei,t.


## 3.2. Test of Mediating and Moderating Effects

This paper uses the productive investment ratio as the transmission mechanism of the mediating effect: “intergenerational inheritance→productive investment ratio→family business financialization.” The specific formula is as follows:(2)Y=cX+e1,M=aX+e2,Y=cX′+bM+e3.At the same time, this paper constructs models (3), (4), and (5) to test this action path.
(3)Fini,t=α0+α1Ji,t+αControli,t+∑Year+∑Industry+εi,t,(4)Inputi,t=β0+β1Jci,t+βControli,t+∑Year+∑Industry+εi,t,(5)Fini,t=γ0+γ1Jci,t+γ2Inputi,t+χControli,t+∑Year+∑Industry+εi,t.The specific operations are as follows: first: decentralize the variables studied in this paper and then use the “c_” variable to represent the centralized variables. Second: use the model to test it and observe the coefficient a1; if the coefficient a1 is significant, then you can continue to test the model after that. If the coefficient a1 is not significant, then there is no mediation effect, and the next test is not needed [21].. Third: use the model to test the intergenerational inheritance The impact on the productive investment ratio, focus on the coefficient β1; use the model to verify the impact of intergenerational inheritance and the productive investment ratio on the financialization of family businesses, focusing on y1 and yr. If the coefficient β1 is significant, then when the coefficient rz and when both y1 are significant, it means that the productive investment ratio plays a partial mediating effect [22].This paper tests the previous hypotheses H3a and H3b and builds a model to analyze the moderating effect of family business second-generation identity (eldest son, eldest daughter) on the impact of intergenerational inheritance on family business financialization. Mainly analyzes the interaction term JcxSon coefficientμ1 of intergenerational inheritance and family business second-generation identity (eldest son, eldest daughter) When μ2 is greater than 0, it means that the second-generation identity (eldest son, eldest daughter) of family business will weaken the effect of intergenerational inheritance on family business. The negative impact of financialization means that hypothesis H3a holds. When μ is 0, it means that (eldest son, eldest daughter) such impact for corporate so it is assumed it is established. For such company will be like:
(6)Fini,t=μ0+μ1Jci,t+μ2Jci,t×Soni,t+μ3Soni,t.This paper tests the previous hypotheses H4a and H4b and builds a model. A comprehensive inheritance model based on three dimensions of individual, family, and business needs is shown in Figure4.Figure 4
Comprehensive inheritance model.Mainly analyze the interaction term JcxRep regression coefficientθ of intergenerational inheritance and family business heir reputation, when θ2 is less than 0, indicating the reputation of the heirs, that will be, assuming that H4a is established and H4b is not established. Conversely, if θ2 is significantly greater and this proves assuming that H4b holds, and assuming that H4a does not hold such company.
(7)Fini,t=θ0+θ1Jci,t+θ2Jci,t×Repi,t+θ3Repi,t+θControli,t.This paper tests the previous hypotheses H5a and H5b and builds a model. It mainly analyzes the interaction term JcxPc regression coefficientφ2 of intergenerational inheritance and political connection. When φ2 is greater than 0, it indicates that the political connection of family business can weaken the negative impact of intergenerational inheritance on the financialization of family business, which verifies the hypothesis H5b. When φ2 is less than 0, it means that the political connection of family business heirs will enhance the negative impact of intergenerational inheritance on the financialization of family business, which verifies hypothesis H5a.
(8)Fini,t=ϕ0+ϕ1Jci,t+ϕ2Jci,t×Pci,t+ϕ3Pci,t+ϕControli,t.


## 4. Result Analysis and Discussion

### 4.1. Experimental Data and Variable Definitions

Combined with the characteristics of China’s economic development, this paper makes a definition after comparative analysis and research. The family business mentioned in this article specifically refers to the enterprise that has the ownership or management right of the enterprise, and its inheritance right can be smoothly inherited by the successor. In addition, according to the current business environment in China, the ownership of family businesses is slowly changing, specifically weakening. Combined with other viewpoints, this paper regards companies with a shareholding ratio of more than 10% as family businesses. Figure5 shows the specific proportion of family businesses with a shareholding ratio of more than 10%. From the figure, in 2018, the number of family business reached the maximum, for 28579, family business holdings reached more than 10% and also reached the largest, for 159, and the family business also reached the maximum in 2018; the maximum of the family business is 28184, the maximum proportion of 122, but the family bussiness holdings is less than the family bussiness market share.Figure 5
The specific proportion of family enterprises with a shareholding ratio of more than 10%.After the rough selection of the family business sample, in order to make the sample more detailed, this paper excludes the family business related to the financial industry and the real estate industry, because this kind of enterprise is the main business, and the way of profit is very different from other industries, other non-financial and real estate family businesses. After data screening, 5368 pieces of research data of 488 listed family enterprises that completed inheritance from 2008 to 2018 were finally obtained. This paper takes the family enterprises that implemented intergenerational inheritance from 2008 to 2018 as the research object for comparison.The businesses in this article are from Cathay Pacific, Shun Huashun, and major financial websites. Intergenerational inheritance: intergenerational inheritance is a long-term process, mainly because the children of the founder of the family business begin to take over the business, obtain management rights, become senior executives, or join the board of directors of the enterprise. Officially started, when defining intergenerational inheritance in this paper, it takes 1; otherwise, it takes 0.Financialization (fin): This paper refers to the opinions of others when defining the degree of financialization and uses the ratio of financial assets held by family enterprises to total assets to measure the degree of financialization of the company. This paper divides financial assets into three categories according to the balance sheet of listed family enterprises.Financial institutionalization depth (fin): This paper will refer to the views of other people when defining the depth of enterprise financialization and judge the depth of financial institutionalization of small and medium-sized enterprises by using the percentage of the property owned by family enterprises in the total amount. According to the balance sheet of listed family enterprises, this paper divides the property into three types.Proportion of productive capital: according to this argument, this paper will choose two methods to calculate the proportion of productive capital of enterprises: one is to use the cash flow statement to calculate the difference between the cash used by enterprises when investing in fixed assets and the cash received when dealing with fixed assets investment. Then, the difference is the required productive investment. Second, the balance sheet is used to calculate the difference between the assets at the end of the year and the assets at the beginning of the year, and the difference is used for productive investment. Although the invested assets of general companies do not completely include manufacturing fixed assets and non-productive investment, general companies also invest in fixed assets, intangible assets, and other fixed assets in the process of production and operation. Therefore, this paper regards productive assets as productive assets. Calculate productive assets.Figure6 shows the productive investment ratio of family businesses. Therefore, this paper calculates the proportion of productive investment as follows:Figure 6
Productive investment ratio of family businesses.Family second-generation identity (Son): according to relevant literature, many scholars believe that the factors that affect the success of intergenerational inheritance include the overall quality of the heir, the skills and business ability he possesses, and whether he can give full play to the advantages of family resources. Being the eldest son and the eldest daughter, the resources he has are very different from others, which may also affect the business decisions of the enterprise. Therefore, this paper uses the eldest son and eldest daughter as a moderator variable and takes the value of 1 for the samples with the identities of “eldest son and eldest daughter” in the second-generation heirs, and 0 otherwise. Table1 describes the variables.Table 1
Variable description.
Variable typeVariable nameVariable definitionExplained variableDegree of financialization FinHeld to maturity investment + financial assets available for sale + investment real estate + trading financial assets + loans and loans issued.Explanatory variablesIntergenerational transfer JcWhen it is an executive, the number will be 0.Intermediary variableProductive investment proportionProductive investment proportion = (net amount of fixed assets, - net amount of fixed assets, total assetsSecond-generation identity SonDummy variable: the samples with the identity of “eldest son and eldest daughter” in the identity of the second-generation maintainer are all taken as 1, otherwise it is 0.Adjusting variableEntrepreneur reputation RepDummy variable: the heir who has won the honorary title at the municipal level or above the table shadow is 1, and the heir who has won the honorary title below the municipal level or the table color is 0Political identity PcIf the one served will be at all levels or a representative of the National People’s Congress at all levels or a government official at all levels (including temporary posts), the number is 1, and the number of incense is 0


### 4.2. Experimental Results and Analysis

This paper mainly uses Stata software to carry out descriptive statistical analysis on the data studied in this paper, including data such as mean, median, and maximum values. The results are shown in Table2.Table 2
Descriptive statistics of related variables.
VariableAverage valueMedianStandard deviationMinimum valueMaximum valueFin0.01830.00080.04230.0000.2520Jc0.47910.00000.49960.00001.0000Pc0.16600.00000.37210.00001.0000Son0.94881.00000.22050.00001.0000Rep0.10470.00000.30620.00001.0000Input0.05810.03200.0960-0.13310.4873G0.08740.07450.06240.00790.3880Lev0.40300.39870.19330.05300.8392Age2.10132.14700.23441.20262.4944Size9.26619.23470.50138.183210.5716Rt0.30100.00000.45870.00001.000Roe0.11650.09810.1098-0.26140.4900Growth0.18520.12910.3519-0.50042.1684The following conclusions can be drawn from Table2: it can be seen that the average value of the financialization index (Fin) is 0.0183, indicating that family businesses are generally at a high level of financialization. However, the median is only 0.0008, indicating that the degree of financialization of a large number of family businesses is still very low. From the highest value, the lowest value is 0, and the highest value is 0.2520, indicating that there is a large gap in the level of family business financialization in China. The average value of intergenerational inheritance (Jc) of Chinese listed family enterprises is 0.4791, the median value is 0, the maximum value is 1, and the minimum value is 0, indicating that family enterprises have successively entered the inheritance sampling cycle. The average productive investment ratio (input) of the intermediary variable is 0.0581, the median is 0.0320, and the minimum is -0.1331, indicating that the overall productive investment ratio of family enterprises is low.Table3 shows the regression results of productive investment ratio as an intermediary variable. From the test results in Table 3, the regression coefficient (au) of intergenerational inheritance (Jc) column 2 on corporate financialization (Fin) is -0.0032, which is significant at the level of 5%. The research shows that intergenerational inheritance has an inhibitory effect on the financialization of family enterprises; In the third column of the table, we can see the coefficient of intergenerational inheritance (Jc) to productive investment ratio (input) (β1). It is -0.0045, which means that intergenerational genetics is inversely proportional to productive investment rate.Table 3
Regression results of productive investment ratio as an intermediary variable.
Variablec_Finc_Inputc_Finc_Jc-0.0032∗∗(-2.03)-0.0045∗(-1.70)-0.0034∗∗(-2.12)c_Input-0.0315∗∗∗(-3.28)c_G-0.0170∗(-1.66)0.0156(0.91)-0.0165(-1.61)c_Lev-0.0044(-1.10)-0.0084(-1.28)-0.0046(-1.17)Table4 shows the regression results of intergenerational inheritance, second-generation identity, and family business financialization. As can be seen from Table 4, the coefficient in front of intergenerational inheritance is -0.0207, indicating that intergenerational inheritance is negatively correlated with the degree of financialization of family enterprises, which is significant at the level of 1%. This section mainly analyzes the interaction between intergenerational inheritance and second-generation identity (eldest son, eldest daughter), that is, jcxson, which is significantly positive at the level of 1%. This means that the identity of the second generation (eldest son, eldest daughter) will weaken the inhibitory effect of intergenerational inheritance on the financialization of family businesses, that is, confirm hypothesis h3a but reject hypothesis H3B. In the process of intergenerational inheritance of family enterprises, if the heir is the eldest son or daughter, he can inherit the family wealth and the special capital of the founder to the greatest extent, and then he can choose more strategies and decisions, which will lead more enterprises to shift their investment direction to the field of financial investment.Table 4
Regression results of intergenerational inheritance, second-generation identity, and financialization of family businesses.
VariableFinStandard deviationt valueJc-0.0207∗∗∗0.0063-3.26Jc∗son0.0191∗∗∗0.00642.97Son-0.0109∗∗0.0050-2.18G-0.0240∗∗0.0103-2.33Lev-0.00240.0040-0.61Age0.0173∗∗∗0.00354.89Size0.0119∗∗∗0.00177.02Rt0.0045∗∗∗0.00153.00Roe0.00590.00590.99Growth-0.00600.0019-3.12_cons-0.12750.0170-7.48YearControlIndustryControlAdj R20.09N536853685348


## 4.1. Experimental Data and Variable Definitions

Combined with the characteristics of China’s economic development, this paper makes a definition after comparative analysis and research. The family business mentioned in this article specifically refers to the enterprise that has the ownership or management right of the enterprise, and its inheritance right can be smoothly inherited by the successor. In addition, according to the current business environment in China, the ownership of family businesses is slowly changing, specifically weakening. Combined with other viewpoints, this paper regards companies with a shareholding ratio of more than 10% as family businesses. Figure5 shows the specific proportion of family businesses with a shareholding ratio of more than 10%. From the figure, in 2018, the number of family business reached the maximum, for 28579, family business holdings reached more than 10% and also reached the largest, for 159, and the family business also reached the maximum in 2018; the maximum of the family business is 28184, the maximum proportion of 122, but the family bussiness holdings is less than the family bussiness market share.Figure 5
The specific proportion of family enterprises with a shareholding ratio of more than 10%.After the rough selection of the family business sample, in order to make the sample more detailed, this paper excludes the family business related to the financial industry and the real estate industry, because this kind of enterprise is the main business, and the way of profit is very different from other industries, other non-financial and real estate family businesses. After data screening, 5368 pieces of research data of 488 listed family enterprises that completed inheritance from 2008 to 2018 were finally obtained. This paper takes the family enterprises that implemented intergenerational inheritance from 2008 to 2018 as the research object for comparison.The businesses in this article are from Cathay Pacific, Shun Huashun, and major financial websites. Intergenerational inheritance: intergenerational inheritance is a long-term process, mainly because the children of the founder of the family business begin to take over the business, obtain management rights, become senior executives, or join the board of directors of the enterprise. Officially started, when defining intergenerational inheritance in this paper, it takes 1; otherwise, it takes 0.Financialization (fin): This paper refers to the opinions of others when defining the degree of financialization and uses the ratio of financial assets held by family enterprises to total assets to measure the degree of financialization of the company. This paper divides financial assets into three categories according to the balance sheet of listed family enterprises.Financial institutionalization depth (fin): This paper will refer to the views of other people when defining the depth of enterprise financialization and judge the depth of financial institutionalization of small and medium-sized enterprises by using the percentage of the property owned by family enterprises in the total amount. According to the balance sheet of listed family enterprises, this paper divides the property into three types.Proportion of productive capital: according to this argument, this paper will choose two methods to calculate the proportion of productive capital of enterprises: one is to use the cash flow statement to calculate the difference between the cash used by enterprises when investing in fixed assets and the cash received when dealing with fixed assets investment. Then, the difference is the required productive investment. Second, the balance sheet is used to calculate the difference between the assets at the end of the year and the assets at the beginning of the year, and the difference is used for productive investment. Although the invested assets of general companies do not completely include manufacturing fixed assets and non-productive investment, general companies also invest in fixed assets, intangible assets, and other fixed assets in the process of production and operation. Therefore, this paper regards productive assets as productive assets. Calculate productive assets.Figure6 shows the productive investment ratio of family businesses. Therefore, this paper calculates the proportion of productive investment as follows:Figure 6
Productive investment ratio of family businesses.Family second-generation identity (Son): according to relevant literature, many scholars believe that the factors that affect the success of intergenerational inheritance include the overall quality of the heir, the skills and business ability he possesses, and whether he can give full play to the advantages of family resources. Being the eldest son and the eldest daughter, the resources he has are very different from others, which may also affect the business decisions of the enterprise. Therefore, this paper uses the eldest son and eldest daughter as a moderator variable and takes the value of 1 for the samples with the identities of “eldest son and eldest daughter” in the second-generation heirs, and 0 otherwise. Table1 describes the variables.Table 1
Variable description.
Variable typeVariable nameVariable definitionExplained variableDegree of financialization FinHeld to maturity investment + financial assets available for sale + investment real estate + trading financial assets + loans and loans issued.Explanatory variablesIntergenerational transfer JcWhen it is an executive, the number will be 0.Intermediary variableProductive investment proportionProductive investment proportion = (net amount of fixed assets, - net amount of fixed assets, total assetsSecond-generation identity SonDummy variable: the samples with the identity of “eldest son and eldest daughter” in the identity of the second-generation maintainer are all taken as 1, otherwise it is 0.Adjusting variableEntrepreneur reputation RepDummy variable: the heir who has won the honorary title at the municipal level or above the table shadow is 1, and the heir who has won the honorary title below the municipal level or the table color is 0Political identity PcIf the one served will be at all levels or a representative of the National People’s Congress at all levels or a government official at all levels (including temporary posts), the number is 1, and the number of incense is 0


## 4.2. Experimental Results and Analysis

This paper mainly uses Stata software to carry out descriptive statistical analysis on the data studied in this paper, including data such as mean, median, and maximum values. The results are shown in Table2.Table 2
Descriptive statistics of related variables.
VariableAverage valueMedianStandard deviationMinimum valueMaximum valueFin0.01830.00080.04230.0000.2520Jc0.47910.00000.49960.00001.0000Pc0.16600.00000.37210.00001.0000Son0.94881.00000.22050.00001.0000Rep0.10470.00000.30620.00001.0000Input0.05810.03200.0960-0.13310.4873G0.08740.07450.06240.00790.3880Lev0.40300.39870.19330.05300.8392Age2.10132.14700.23441.20262.4944Size9.26619.23470.50138.183210.5716Rt0.30100.00000.45870.00001.000Roe0.11650.09810.1098-0.26140.4900Growth0.18520.12910.3519-0.50042.1684The following conclusions can be drawn from Table2: it can be seen that the average value of the financialization index (Fin) is 0.0183, indicating that family businesses are generally at a high level of financialization. However, the median is only 0.0008, indicating that the degree of financialization of a large number of family businesses is still very low. From the highest value, the lowest value is 0, and the highest value is 0.2520, indicating that there is a large gap in the level of family business financialization in China. The average value of intergenerational inheritance (Jc) of Chinese listed family enterprises is 0.4791, the median value is 0, the maximum value is 1, and the minimum value is 0, indicating that family enterprises have successively entered the inheritance sampling cycle. The average productive investment ratio (input) of the intermediary variable is 0.0581, the median is 0.0320, and the minimum is -0.1331, indicating that the overall productive investment ratio of family enterprises is low.Table3 shows the regression results of productive investment ratio as an intermediary variable. From the test results in Table 3, the regression coefficient (au) of intergenerational inheritance (Jc) column 2 on corporate financialization (Fin) is -0.0032, which is significant at the level of 5%. The research shows that intergenerational inheritance has an inhibitory effect on the financialization of family enterprises; In the third column of the table, we can see the coefficient of intergenerational inheritance (Jc) to productive investment ratio (input) (β1). It is -0.0045, which means that intergenerational genetics is inversely proportional to productive investment rate.Table 3
Regression results of productive investment ratio as an intermediary variable.
Variablec_Finc_Inputc_Finc_Jc-0.0032∗∗(-2.03)-0.0045∗(-1.70)-0.0034∗∗(-2.12)c_Input-0.0315∗∗∗(-3.28)c_G-0.0170∗(-1.66)0.0156(0.91)-0.0165(-1.61)c_Lev-0.0044(-1.10)-0.0084(-1.28)-0.0046(-1.17)Table4 shows the regression results of intergenerational inheritance, second-generation identity, and family business financialization. As can be seen from Table 4, the coefficient in front of intergenerational inheritance is -0.0207, indicating that intergenerational inheritance is negatively correlated with the degree of financialization of family enterprises, which is significant at the level of 1%. This section mainly analyzes the interaction between intergenerational inheritance and second-generation identity (eldest son, eldest daughter), that is, jcxson, which is significantly positive at the level of 1%. This means that the identity of the second generation (eldest son, eldest daughter) will weaken the inhibitory effect of intergenerational inheritance on the financialization of family businesses, that is, confirm hypothesis h3a but reject hypothesis H3B. In the process of intergenerational inheritance of family enterprises, if the heir is the eldest son or daughter, he can inherit the family wealth and the special capital of the founder to the greatest extent, and then he can choose more strategies and decisions, which will lead more enterprises to shift their investment direction to the field of financial investment.Table 4
Regression results of intergenerational inheritance, second-generation identity, and financialization of family businesses.
VariableFinStandard deviationt valueJc-0.0207∗∗∗0.0063-3.26Jc∗son0.0191∗∗∗0.00642.97Son-0.0109∗∗0.0050-2.18G-0.0240∗∗0.0103-2.33Lev-0.00240.0040-0.61Age0.0173∗∗∗0.00354.89Size0.0119∗∗∗0.00177.02Rt0.0045∗∗∗0.00153.00Roe0.00590.00590.99Growth-0.00600.0019-3.12_cons-0.12750.0170-7.48YearControlIndustryControlAdj R20.09N536853685348


## 5. Conclusion

This paper attempts to analyze how they affect the intergenerational inheritance of family businesses through the study of other factors. Therefore, we choose a unique identity, including son, daughter, and so on, as the regulatory factors to explore its impact on the intergenerational inheritance of family businesses. Intergenerational inheritance can regulate the financialization of family business. From the conclusion of this study, it can be summarized as the following aspects. First, the effect is usually inhibitory. Secondly, the proportion of productive investment plays a masking role in the process of influencing the financialization of family enterprises through intergenerational inheritance. Finally, the second generation identity (eldest son, eldest daughter) has a greater inhibitory effect on family businesses.



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*Source: 2807116-2022-10-03.xml*