Inheritance Law and Investment in Family Firms

Andrew Ellul, Marco Pagano and Fausto Panunzi
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Fausto Panunzi: Bocconi University, FEEM, CEPR and ECGI

No 915, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: Entrepreneurs may be legally bound to bequeath a minimal stake to non-controlling heirs. The size of this stake can reduce investment in family firms, by reducing the future income they can pledge to external financiers. Using a purpose-built indicator of the permissiveness of inheritance law and data for 10,004 firms from 38 countries in 1990-2006, we find that stricter inheritance law is associated with lower investment in family firms, but does not affect investment in non-family firms. Moreover, as the model predicts, inheritance law affects investment only in family firms that experience a succession.

Pages: 64 pages
Date: 2009, Revised 2009-11
New Economics Papers: this item is included in nep-ent
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Inheritance Law and Investment in Family Firms (2010)
Working Paper: Inheritance Law and Investment in Family Firms (2009)
Working Paper: Inheritance Law and Investment in Family Firms (2009)
Working Paper: Inheritance Law and Investment in Family Firms (2009)
Working Paper: Inheritance Law and Investment in Family Firms (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eie:wpaper:0915

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