IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v41y2013i2p315-334.html
   My bibliography  Save this article

Succession financing in family firms

Author

Listed:
  • Christian Koropp

    ()

  • Dietmar Grichnik
  • André Gygax

    ()

Abstract

Business succession is one of the primary management challenges for family firms. However, many family firms fail at this task because of financial issues. Although a vast number of studies have investigated the succession process, research thus far has failed to determine how and why family firms select particular forms of financing for succession-related expenditures. Accordingly, this study conceptually and empirically investigates succession financing. We introduce a conceptual framework that investigates the reasons behind an owner-manager’s intent to use debt for succession financing. Specifically, our model accounts for general and succession-related personal factors. However, we also include a set of firm-specific financing behavioral controls in our research. The empirical results are derived from a sample of 187 German family firms, and the results highlight financial knowledge, attitudes, succession experience, and succession planning as significant determinants of the owner-managers’ debt usage intentions. The implications and avenues for future research are discussed. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Christian Koropp & Dietmar Grichnik & André Gygax, 2013. "Succession financing in family firms," Small Business Economics, Springer, vol. 41(2), pages 315-334, August.
  • Handle: RePEc:kap:sbusec:v:41:y:2013:i:2:p:315-334
    DOI: 10.1007/s11187-012-9442-z
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11187-012-9442-z
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kimberly A. Eddleston & Franz Willi Kellermanns & Ravi Sarathy, 2008. "Resource Configuration in Family Firms: Linking Resources, Strategic Planning and Technological Opportunities to Performance," Journal of Management Studies, Wiley Blackwell, vol. 45(1), pages 26-50, January.
    2. Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-591, July.
    3. Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003. "Family Firms," Journal of Finance, American Finance Association, vol. 58(5), pages 2167-2202, October.
    4. Annamaria Lusardi & Olivia S. Mitchell, 2008. "Planning and Financial Literacy: How Do Women Fare?," American Economic Review, American Economic Association, vol. 98(2), pages 413-417, May.
    5. Lusardi, Annamaria & Tufano, Peter, 2015. "Debt literacy, financial experiences, and overindebtedness," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(04), pages 332-368, October.
    6. Eddleston, Kimberly A. & Kellermanns, Franz W., 2007. "Destructive and productive family relationships: A stewardship theory perspective," Journal of Business Venturing, Elsevier, vol. 22(4), pages 545-565, July.
    7. Omer Brav, 2009. "Access to Capital, Capital Structure, and the Funding of the Firm," Journal of Finance, American Finance Association, vol. 64(1), pages 263-308, February.
    8. Miller, Danny & Steier, Lloyd & Le Breton-Miller, Isabelle, 2003. "Lost in time: intergenerational succession, change, and failure in family business," Journal of Business Venturing, Elsevier, vol. 18(4), pages 513-531, July.
    9. Romano, Claudio A. & Tanewski, George A. & Smyrnios, Kosmas X., 2001. "Capital structure decision making: A model for family business," Journal of Business Venturing, Elsevier, vol. 16(3), pages 285-310, May.
    10. Morten Bennedsen & Kasper Meisner Nielsen & Francisco Perez-Gonzalez & Daniel Wolfenzon, 2007. "Inside the Family Firm: The Role of Families in Succession Decisions and Performance," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 647-691.
    11. Habbershon, Timothy G. & Williams, Mary & MacMillan, Ian C., 2003. "A unified systems perspective of family firm performance," Journal of Business Venturing, Elsevier, vol. 18(4), pages 451-465, July.
    12. Bjuggren, Per-Olof & Sund, Lars-Goran, 2002. "A Transaction Cost Rationale for Transition of the Firm within the Family," Small Business Economics, Springer, vol. 19(2), pages 123-133, September.
    13. Denise Diwisch & Peter Voithofer & Christoph Weiss, 2009. "Succession and firm growth: results from a non-parametric matching approach," Small Business Economics, Springer, vol. 32(1), pages 45-56, January.
    14. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    15. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    16. Mullins, John W. & Forlani, David, 2005. "Missing the boat or sinking the boat: a study of new venture decision making," Journal of Business Venturing, Elsevier, vol. 20(1), pages 47-69, January.
    17. Shepherd, Dean A. & Zacharakis, Andrew & Baron, Robert A., 2003. "VCs' decision processes: Evidence suggesting more experience may not always be better," Journal of Business Venturing, Elsevier, vol. 18(3), pages 381-401, May.
    18. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
    19. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    20. Sharma, Pramodita & Chrisman, James J. & Chua, Jess H., 2003. "Predictors of satisfaction with the succession process in family firms," Journal of Business Venturing, Elsevier, vol. 18(5), pages 667-687, September.
    21. Allan Riding & Barbara Orser & Martine Spence & Brad Belanger, 2012. "Financing new venture exporters," Small Business Economics, Springer, vol. 38(2), pages 147-163, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Britta Boyd & Isabel C. Botero & Tomasz A. Fediuk, 2014. "Incumbent Decisions about Succession Transitions in Family Firms: A Conceptual Model," International Journal of Financial Studies, MDPI, Open Access Journal, vol. 2(4), pages 1-24, November.
    2. Rasoul Shafieyoon & Marjan Mansouri, 2014. "Factors Dominating the Continuity and Decline of Family Businesses," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(1), pages 327-343, January.

    More about this item

    Keywords

    Family firms; Succession; Decision making; Debt financing; G32; L26;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:41:y:2013:i:2:p:315-334. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.