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

Author

Listed:
  • Arndt Werner

    (University of Siegen)

  • Sabrina Schell

    (University of Bern)

  • Ljuba Haunschild

    (Institut für Mittelstandsforschung Bonn (IfM))

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.

Suggested Citation

  • Arndt Werner & Sabrina Schell & Ljuba Haunschild, 2021. "How does a succession influence investment decisions, credit financing and business performance in small and medium-sized family firms?," International Entrepreneurship and Management Journal, Springer, vol. 17(1), pages 423-446, March.
    • Handle: RePEc:spr:intemj:v:17:y:2021:i:1:d:10.1007_s11365-019-00613-5
    DOI: 10.1007/s11365-019-00613-5
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    References listed on IDEAS

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    1. Pahnke, André & Schlepphorst, Susanne & Schlömer-Laufen, Nadine, 2024. "Family business successions between desire and reality," Journal of Business Venturing Insights, Elsevier, vol. 21(C).

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