【Speaker】: Wei Shen, Professor, W. P. Carey Management and Entrepreneurship

Associate Dean for China Programs and Professor

IACMR Newly Elected Vice President

【Topic】: Could there be a socioemotional bond? An evolutionary perspective of Professional CEOs’ risk of dismissal in family-controlled firms

【Date】: 10:00-12:00 Tue. 2019/6/25

【Room】: Room 513, Wei Lun Building, Tsinghua SEM

【Language】: English

Hosted by: Tsinghua-Rice University Joint Research Center on Human Capital and Sustainable Innovation & Department of Leadership and Organization Management, Tsinghua SEM

ABSTRACT

This study departs from the conventional agency theory explanation of CEO dismissal and examines the dynamics of the relationship between the controlling families and the professional CEOs. Taking an evolutionary perspective, we propose that a socioemotional bond, defined as a strong relationship based on trust, respect and affect, can be formed between the controlling families and the professional CEOs over a substantive period of time or through a transformational event. This socioemotional bond will reduce the professional CEOs’ risk of dismissal and weaken its association with firm financial performance. Using data from a sample of family-controlled firms in Taiwan from 1999 to 2013, we find empirical evidence consistent with our theoretical predictions. In addition to introducing an evolutionary perspective to advance the understanding of the dynamic relationship between controlling families and professional CEOs in family-controlled firms, our study has important implications for corporate governance research on the principal-agent relationship that has been dominated by economic and political perspectives.