family governance

Family governance can enhance family members' identity to the enterprise, increase their psychological investment and emotional dependence on the enterprise, and reduce agency costs among family members. Some empirical studies on specific governance mechanisms also show that family governance is conducive to the long-term planning of the family and the smooth realization of intergenerational inheritance. For example, the family council helps to extend the life cycle of the family business. Because corporate governance and financial data and materials are relatively easy to obtain, there are many research results on the relationship between corporate formal governance (such as board of directors, CEO salary incentives) and corporate performance. However, there are few studies on the impact of family governance on family business performance. The reason is that family governance information is relatively private, and business families use family governance with a high degree of personalization. In several seminal studies, empirical data have shown that family governance practices, including family constitutions, family codes of conduct, formal family communication mechanisms, and family reunions, can improve family business and Financial performance of other wealth managed by the family. Marta M. Berent Braun et al conducted a sample analysis of 64 family businesses in 18 countries, and concluded that family governance practices can improve business performance. They believe that this is mainly because the business family has formed a team (team) to maintain and increase family wealth through family governance, forming a common goal and value pursuit. The study found that family governance is a process of family enterprise, in which collective learning and collective values play a role, rather than individual independent tendencies