Peculiarities Of Financial Management In Family Firms

Abstract

The majority of firms in market-oriented countries are family-owned. Despite their significant economic importance for these countries, research focusing on family firms is a rather young field within business research, having intensified starting only in the late 1980s. Research regarding the peculiarities of financial management in family firms is especially scarce. Hence, this paper seeks to synthesize existing research and to theoretically analyze the finance and accounting practices and resources of, as well as the role of financial managers in family firms. Using agency theory, stewardship theory, and the resource-based view of the firm, this paper suggests that finance and accounting practices should be adapted to the controlling familys needs. The paper further suggests that family firms are likely to use fewer short-term-oriented financial-management practices than non-family firms. Moreover, compared to non-family firms, financial managers should play a more traditional role in family firms, focusing on core financial management tasks and on advising the controlling family, while not themselves holding strategic decision-making power. The paper concludes with concrete avenues for further research.

Risk aversion in family firms: what do we really know?

“…By far, most of the articles (17) were published in entrepreneurship and family business journals. Family Business Review, the oldest scholarly journal entirely dedicated to family firms (Hiebl, 2012), was the most important single outlet for the topic of risk aversion in family firms. It is also only in the field of entrepreneurship and family business that more than one article on risk aversion in family firms could be identified in one single journal.…”

“…Moreover, family firm owners tend to have large parts of their private wealth invested in the family firm, which should further increase their aversion to risky ventures in the family firm (Bianco et al, 2012). These notions have led to a widely held assumption that family firms are more risk averse than non-family firms (Gómez-Mejía et al, 2007;Hiebl, 2012). However, the long-term orientation of family firms might also lead to the pursuit of longer-term innovative or creative strategies that might pose too high of a risk for comparable non-family firms that must deliver short-term results (Sirmon and Hitt, 2003;Zellweger, 2007).…”

Can family business managers manage family business risks?

“…Therefore, they need to make their risks more visible and capture the credit for risk-taking in ways that signal their success to those around them, such as to name the risk, articulate the cost-benefit calculation, and promote accomplishments by letting decision-makers know about their risk actions. Hiebl (2012) claims that these notions lead to the assumption that family businesses are more risk-averse than nonfamily businesses. The next section outlines risk management strategies for the family business.…”

Influência da estrutura de propriedade e do gerenciamento familiar sobre o posicionamento em fusões e aquisições

“…Tanto a valorização do controle acionário das empresas com estrutura de propriedade familiar, quanto a aversão ao risco e o desempenho da gestão familiar tem despertado interesse crescente na literatura sobre a estratégia de negócios e a economia financeira, principalmente, em consequência da expressiva representação das empresas familiares no atual cenário econômico global (Villalonga & Amit, 2006;Hiebl, 2012). No entanto, a influência da estrutura de propriedade e da gestão familiar na decisão de se envolver em fusões ou aquisições e de se posicionar como empresa adquirente ou adquirida são lacunas de pesquisa (Villalonga & Amit, 2006;Caprio, Croci & Del Giudice, 2011).…”