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Family ownership, managerial incumbency, and firm performance: Evidence from China under policy uncertainty

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  • Zheng, Shilong
  • Piao, Xuelian

Abstract

This study investigates how family governance affects firm performance in China and how economic policy uncertainty (EPU) influences these effects. Using panel data on Chinese listed firms from 2009 to 2019 and fixed effects estimates, we distinguish between family ownership as a governance structure and family managerial incumbency as an operational choice. The results demonstrate that family ownership is associated with a modest increase in firm value, as measured by Tobin’s Q. In contrast, family involvement in top management positions, specifically the chairman and chief executive officer roles, is associated with significantly lower firm performance. This contrast suggests that the managerial costs of family incumbency outweigh the valuation benefits of ownership-based family control. EPU reduces firm value on average; however, interaction results suggest that policy uncertainty conditions the effects of family governance by amplifying the performance benefits of family control and attenuating the adverse effects of family managerial incumbency. Robustness tests using accounting-based performance measures yield consistent results.

Suggested Citation

  • Zheng, Shilong & Piao, Xuelian, 2026. "Family ownership, managerial incumbency, and firm performance: Evidence from China under policy uncertainty," Finance Research Letters, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finlet:v:90:y:2026:i:c:s1544612325026650
    DOI: 10.1016/j.frl.2025.109416
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