Family firms’ investments, uncertainty and opacity

Magda Bianco, Maria Bontempi, Roberto Golinelli and Giuseppe Parigi

Small Business Economics, 2013, vol. 40, issue 4, 1035-1058

Abstract: This paper contributes to the literature on family firms in two ways. First, it focuses on a largely neglected but important issue of family firms’ investment decisions. Second, it uses a novel and rich data set about Italian private firms; this complements the literature, which typically focuses on publicly traded companies, in an important way, given that most family firms are private and relatively little information is available on their behaviour. Our results suggest that family firms’ investments are significantly more sensitive to uncertainty than nonfamily firms. We find evidence that the greater sensitivity to uncertainty is basically due to the greater opacity of family firms and to their higher risk aversion, rather than to the degree of sunk fixed capital as is typical in the literature on investment decisions. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Family firms; Investments; Uncertainty; Capital irreversibility; Opacity; D22; E22; C23; G32; L26 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (37)

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DOI: 10.1007/s11187-012-9414-3

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