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Contract Enforcement and Family Control of Business: Evidence from China

  • Yi, Lu
  • Zhigang, Tao

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18209.

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Date of creation: Jun 2009
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Handle: RePEc:pra:mprapa:18209
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