The role of information asymmetry in the choice of entrepreneurial exit routes

Tobias Dehlen, Thomas Zellweger, Nadine Kammerlander and Frank Halter

Journal of Business Venturing, 2014, vol. 29, issue 2, 193-209

Abstract: Our quantitative study investigates the determinants of internal versus external exit routes in family firms. Building on information asymmetry theory, we examine how an owner's inferior knowledge about the abilities of potential external entrants (in contrast to family internal successors) renders a family internal transfer more likely. This information asymmetry, however, can be mitigated by activities such as owners' screening and transfer candidates' signaling efforts to reveal the candidates' abilities. Our data exhibits a positive effect of signaling and an inverted U-shaped effect of screening on the probability of external exit routes. Firm age, as a driver of emotional attachment, weakens these effects.

Keywords: Entrepreneurial exit; Exit routes; Succession; Information asymmetry; Emotional attachment (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (45)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:29:y:2014:i:2:p:193-209

DOI: 10.1016/j.jbusvent.2012.10.001

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