4404 
4049Cross-regional expansion is an important way for firms to solve resource constraints. Through cross-regional expansion, firms can not only find substitutes for current resources, but also make full use of surplus resources and get access to new resources to cope with challenges in the current market. However, the existing literature rarely pays attention to the geographical expansion cross different administrative regions, and seldom discusses the agency conflict between controlling family and non-family member executives, the risk preference of non-family member executives and the incentive effect of equity. Based on the agency theory and the behavioral agency model, this paper attempts to explore the relationship between family control, the proportion of non-family member executives’ involvement and the cross-regional expansion of firms, and the effect of executive incentive mechanism based on equity. Based on the data of listed companies from 2007 to 2018, the main conclusions of this paper are as follows:（1）Family control inhibits the intensity of cross-regional expansion. Compared with non-family firms, family firms are less likely to be engaged in cross-regional expanding in order to maintain family members’ control over the firm and avoid damage to social emotional wealth.（2）With the increase of family involvement, the intensity of cross-regional expansion of family firms will decrease. In addition, the incentive measures based on equity have asymmetric risk characteristics, which will affect the time orientation and risk preference of executives in investment decision-making, and eventually lead to different decisions in the process of cross-regional expansion strategy formulation. Specifically speaking, non-family executives with stock ownership pay more attention to short-term interests and prefer to risk aversion, which alleviates the inhibition of family involvement on the cross-regional expansion intensity of family firms; stock options make non-family executives pay more attention to the long-term development of firms, and strengthen the inhibitory effect of family involvement on the cross-regional expansion intensity of family firms.（3）With the “de-familialization” of family firms, more and more non-family member executives join the governance of family firms, and family firms will be more inclined to make cross-regional development decisions.（4）Cross-regional expansion is conducive to increasing the value of firms, but family firms do not necessarily adopt this strategy, which shows that financial objectives are not the only one to concern for family firms, and the holding family pays more attention to non-financial goals such as social emotional wealth. The possible contribution of this paper is to verify the influence of family control on the cross-regional expansion strategy of firms, explore the effect of stock-based incentive mechanism, enrich the relevant research on the social emotional wealth theory, agency theory and behavioral agent model, and expand the research related to the risk-taking decision of family firms to a certain extent. The conclusions of this paper provide theoretical guidance and empirical evidence for the cross-regional strategy and incentive mechanism of non-family members in family firms.
/ Journals / Foreign Economics & Management
Foreign Economics & Management
LiZengquan, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YinHuifang HeXiaogang LiuJianguo, Vice Editor-in-Chief
Family Control and Cross-Regional Expansion: Empirical Evidence from Listed Companies
Foreign Economics & Management Vol. 43, Issue 04, pp. 85 - 110 (2021) DOI:10.16538/j.cnki.fem.20201028.101
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References
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Cite this article
Wang Bolin, Jia Zhihan, Peng Yi, et al. Family Control and Cross-Regional Expansion: Empirical Evidence from Listed Companies[J]. Foreign Economics & Management, 2021, 43(4): 85-110.
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