Resolution of financial distress in SMEs: How do family ownership and involvement affect second chance?

Carlotta Magri, Federico Bertacchini and Pier Luigi Marchini

Journal of Family Business Strategy, 2025, vol. 16, issue 3

Abstract: The aim of this study is to understand if the idiosyncrasies of family firms affect the likelihood of successfully recovering from financial distress through a debt restructuring proceeding. Relying on the mixed-gamble logic of the behavioral agency model, we hypothesize that family small and medium-sized enterprises (SMEs) have greater chances of resolving financial distress than non-family SMEs, as the former are driven by the preservation of long-term socioemotional wealth. Our findings suggest that family ownership and control, as well as family involvement, are positively associated with the likelihood of successful debt restructuring. This study highlights that the unique emotional attachment family executives have to their business enhances their motivation and capabilities, making them more effective than their non-family counterparts at resolving financial distress through debt restructuring.

Keywords: Debt restructuring; Family firms; SMEs; Socioemotional Wealth (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1877858525000142
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:fambus:v:16:y:2025:i:3:s1877858525000142

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/719791/bibliographic
http://www.elsevier. ... 719791/bibliographic

DOI: 10.1016/j.jfbs.2025.100673

Access Statistics for this article

Journal of Family Business Strategy is currently edited by J.H. Astrachan

More articles in Journal of Family Business Strategy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().