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Considerations on the use of financial ratios in the study of family businesses

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  • Ge`orgia Escaram'is

    (Universitat de Girona, Research Group on Statistics, Econometrics and Health)

  • Anna Arbuss`a

    (Universitat de Girona)

Abstract

Most empirical works that study the financing decisions of family businesses use financial ratios. These data present asymmetry, non-normality, non-linearity and even dependence on the results of the choice of which accounting figure goes to the numerator and denominator of the ratio. This article uses compositional data analysis (CoDa) as well as classical analysis strategies to compare the structure of balance sheet liabilities between family and non-family businesses, showing the sensitivity of the results to the methodology used. The results prove the need to use appropriate methodologies to advance the academic discipline.

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  • Ge`orgia Escaram'is & Anna Arbuss`a, 2025. "Considerations on the use of financial ratios in the study of family businesses," Papers 2501.16793, arXiv.org.
    • Handle: RePEc:arx:papers:2501.16793
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    File URL: http://arxiv.org/pdf/2501.16793
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