Paving the Way for Children: Family Firm Succession and Corporate Philanthropy in China

26 Pages Posted: 27 May 2020

See all articles by Wen He

Wen He

Monash University

Xin Yu

University of Queensland

Date Written: October/November 2019


We investigate whether internal succession in family firms motivates founders to engage in corporate philanthropy. We argue that founders who intend to pass control of the firm to their children are likely to prepare for the internal succession by building up family assets such as reputation and political connections through corporate philanthropy. Supporting our argument, we find that both the likelihood and the amount of philanthropic donations increase when listed family firms in China are in the internal succession process. The effect of successions on philanthropic donations is stronger for family firms that have political connections or are located in areas with stronger government influence in the local economy. The effect concentrates on family firms when heirs are young and inexperienced. When heirs are established, family firms actually make fewer philanthropic donations. Our results remain robust after addressing endogeneity issues.

Keywords: corporate philanthropy, donation, family firms, succession

JEL Classification: G39, M14

Suggested Citation

He, Wen and Yu, Xin, Paving the Way for Children: Family Firm Succession and Corporate Philanthropy in China (October/November 2019). Journal of Business Finance & Accounting, Vol. 46, Issue 9-10, pp. 1237-1262, 2019, Available at SSRN: or

Wen He (Contact Author)

Monash University ( email )

H3.43, Building H, Level 3
Monash University Caulfiled
Melbourne, VIC 3145

Xin Yu

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072

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