Do Family Firms Have Higher or Lower Deal Valuations? A Contextual Analysis

Zulfiquer Ali Haider, Jialong Li, Yefeng Wang and Zhenyu Wu

Entrepreneurship Theory and Practice, 2021, vol. 45, issue 4, 709-739

Abstract: How does the socioemotional wealth (SEW) of a family firm affect its deal valuation in acquisition? Using a sample of 515 completed transactions of S&P 500 firms over the period 2003–2016, we examine a number of contexts and find that SEW creates differential valuations of targets by family firms vis-à -vis non-family firms. Particularly from an internationalization perspective, acquisitions may be an ideal option for family firms because foreign acquisitions may be loosely coupled from the core firm. Post-hoc analyses on the heterogeneity in family governance reveal that founder and descendant board chairs may have different perceptions of SEW.

Keywords: family firms; acquisitions; deal valuation; internationalization; socioemotional wealth; loose coupling (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:45:y:2021:i:4:p:709-739

DOI: 10.1177/1042258720910950

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