How does a succession influence investment decisions, credit financing and business performance in small and medium-sized family firms?

Arndt Werner (), Sabrina Schell () and Ljuba Haunschild
Additional contact information
Arndt Werner: University of Siegen
Sabrina Schell: University of Bern
Ljuba Haunschild: Institut für Mittelstandsforschung Bonn (IfM)

International Entrepreneurship and Management Journal, 2021, vol. 17, issue 1, No 19, 423-446

Abstract: Abstract We examine the influence of succession in small and medium-sized family businesses by focusing on investment decisions, credit financing, and business performance. Using data on German SMEs, we find that the succession event affects investment behavior negatively before but positively after the transfer takes place when compared to firms without any succession intentions. With respect to performance, we show that firms’ growth rates increase after succession has taken place. Although hypothesized, we find no empirical evidence to suggest that banks tend to reject successors more often than they reject other business owners when deciding to extend credit to firms for investment purposes.

Keywords: Family business; SME; Succession event; Investments; Performance; Financial constraints (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11365-019-00613-5

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