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Do Family Firms Have Higher or Lower Deal Valuations? A Contextual Analysis

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  • Zulfiquer Ali Haider
  • Jialong Li
  • Yefeng Wang
  • Zhenyu Wu

Abstract

How does the socioemotional wealth (SEW) of a family firm affect its deal valuation in acquisition? Using a sample of 515 completed transactions of S&P 500 firms over the period 2003–2016, we examine a number of contexts and find that SEW creates differential valuations of targets by family firms vis-à -vis non-family firms. Particularly from an internationalization perspective, acquisitions may be an ideal option for family firms because foreign acquisitions may be loosely coupled from the core firm. Post-hoc analyses on the heterogeneity in family governance reveal that founder and descendant board chairs may have different perceptions of SEW.

Suggested Citation

  • Zulfiquer Ali Haider & Jialong Li & Yefeng Wang & Zhenyu Wu, 2021. "Do Family Firms Have Higher or Lower Deal Valuations? A Contextual Analysis," Entrepreneurship Theory and Practice, , vol. 45(4), pages 709-739, July.
    • Handle: RePEc:sae:entthe:v:45:y:2021:i:4:p:709-739
    DOI: 10.1177/1042258720910950
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    2. Davila, Jessenia & Duran, Patricio & Gómez-Mejía, Luis & Sanchez-Bueno, Maria J., 2023. "Socioemotional wealth and family firm performance: A meta-analytic integration," Journal of Family Business Strategy, Elsevier, vol. 14(2).
    3. Martin Tao-Schuchardt & Frederik J. Riar & Nadine Kammerlander, 2023. "Family Firm Value in the Acquisition Context: A Signaling Theory Perspective," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1200-1232, July.

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