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Long-Term Orientation In Family And Non-Family Firms: A Bayesian Analysis

Author

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  • Jörn Hendrich Block
  • Andreas Thams

Abstract

A stronger long-term orientation is considered a competitive advantage of family firms relative to non-family firms. In this study, we use panel data of U.S. firms and analyze this proposition. Our findings are surprising. Only in when the family is involved in the management of the firm is the firm found to invest more in long-term projects relative to a non-family firm. We also find that investment in long-term projects in family firms is determined less by cash flow variations than for non-family firms. Managerial implications of our findings are discussed. Our hypotheses are tested using Bayesian methods.

Suggested Citation

  • Jörn Hendrich Block & Andreas Thams, 2007. "Long-Term Orientation In Family And Non-Family Firms: A Bayesian Analysis," SFB 649 Discussion Papers SFB649DP2007-059, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  • Handle: RePEc:hum:wpaper:sfb649dp2007-059
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Jörn Hendrich Block, 2008. "Are CEOs in Family Firms Paid Like Bureaucrats? Evidence from Bayesian and Frequentist Analyses," SFB 649 Discussion Papers SFB649DP2008-033, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    2. Jörn Hendrich Block, 2008. "Family Management, Family Ownership and Downsizing: Evidence from S&P 500 Firms," SFB 649 Discussion Papers SFB649DP2008-023, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    3. Hyuna Kim & Sun-Young Park, 2012. "The Relation between Cash Holdings and R&D Expenditures According to Ownership Structure," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 2(2), pages 25-42, December.
    4. Wolfgang Burr & Johann Valentowitsch & Christopher Sauerhoff, 2015. "Examining the Impact of Family Management on Patent Applications for German Industrial Firms," Eurasian Journal of Business and Management, Eurasian Publications, vol. 3(3), pages 1-11.
    5. Block, Joern H., 2012. "R&D investments in family and founder firms: An agency perspective," Journal of Business Venturing, Elsevier, vol. 27(2), pages 248-265.
    6. Tiscini, Riccardo & Raoli, Elisa, 2013. "Stock option plan practices in family firms: The idiosyncratic private benefits approach," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 93-105.

    More about this item

    Keywords

    Family Firm; Long-term Orientation; Myopia; Bayesian Analysis; Agency Theory; Stewardship Theory; Investment Policy;

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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