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Finance in family firms: generation does matter

Author

Listed:
  • Virginia Blanco-Mazagatos
  • Juan Manuel De la Fuente-Sabate
  • Esther De Quevedo-Puente

Abstract

This paper analyses the effect of the desire to perpetuate family control on the financial structure of family firms across generations. We test this effect in a sample where both family and non-family firms have the same level of ownership concentration. We verify that the desire for family control gives rise to financing preferences in line with the pecking order theory. Since the desire for family control persists across generations, these financing preferences remain the same. However, we find that generational transitions weaken family bonds, and thus reduce the family members' capacity for sacrifice, leading to variations in their weighting of the financing sources.

Suggested Citation

  • Virginia Blanco-Mazagatos & Juan Manuel De la Fuente-Sabate & Esther De Quevedo-Puente, 2010. "Finance in family firms: generation does matter," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 11(3), pages 338-352.
    • Handle: RePEc:ids:ijesbu:v:11:y:2010:i:3:p:338-352
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    Cited by:

    1. Filipe Sardo & Elisabete S. Vieira & Zélia Serrasqueiro, 2022. "The role of gender and succession on the debt adjustments of family firm capital structure," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 349-372, June.
    2. Chi Zhang & Qingjun Zeng & Charles Chen & Stavros Sindakis & Sakshi Aggarwal & Nipun Dhaulta, 2023. "The Strategic Resources and Competitive Performance of Family-Owned and Non-Family-Owned Firms in the Retail Business of Los Angeles," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 327-355, March.

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