Strings attached: Socioemotional wealth mixed gambles in the cash management choices of family firms

Domenico Rocco Cambrea, Yuliya Ponomareva, Daniel Pittino and Alessandro Minichilli

Journal of Family Business Strategy, 2022, vol. 13, issue 3

Abstract: Family owners differ from other types of owners due to the presence of socioemotional wealth (SEW) concerns. We take a closer look at this distinctive aspect by examining the impact of family control and influence dimension of SEW on the cash management choices of family firms, conceptualizing it as a mixed gamble choice. Our empirical analysis of 195 Italian firms listed on the Milan Stock Exchange between 2003 and 2015 shows that family firms derive more value and incur lower costs than nonfamily firms when they increase their cash holdings. We then delve deeper into family firms’ cash management choices by exploring how different levels of family control and influence as well as types of board governance arrangements moderate this relationship. The empirical results indicate that the positive effects of family ownership are more pronounced under a high level of family control and influence and with separation of the board chair and CEO positions.

Keywords: Cash holdings; Corporate governance; SEW; Mixed gamble; Boards of directors (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:fambus:v:13:y:2022:i:3:s1877858521000474

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DOI: 10.1016/j.jfbs.2021.100466

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