Succession financing in family firms

Christian Koropp (), Dietmar Grichnik and André Gygax ()

Small Business Economics, 2013, vol. 41, issue 2, 315-334

Abstract: Business succession is one of the primary management challenges for family firms. However, many family firms fail at this task because of financial issues. Although a vast number of studies have investigated the succession process, research thus far has failed to determine how and why family firms select particular forms of financing for succession-related expenditures. Accordingly, this study conceptually and empirically investigates succession financing. We introduce a conceptual framework that investigates the reasons behind an owner-manager’s intent to use debt for succession financing. Specifically, our model accounts for general and succession-related personal factors. However, we also include a set of firm-specific financing behavioral controls in our research. The empirical results are derived from a sample of 187 German family firms, and the results highlight financial knowledge, attitudes, succession experience, and succession planning as significant determinants of the owner-managers’ debt usage intentions. The implications and avenues for future research are discussed. Copyright Springer Science+Business Media, LLC. 2013

Keywords: Family firms; Succession; Decision making; Debt financing; G32; L26 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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DOI: 10.1007/s11187-012-9442-z

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