Strings attached: Socioemotional wealth mixed gambles in the cash management choices of family firms

Yulia Ponomareva .*

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Family owners differ from other types of owners due to the presence of socioemotional wealth (SEW) concerns. We take a closer look at this distinctive aspect by examining the impact of family control and influence dimension of SEW on the cash management choices of family firms, conceptualizing it as a mixed gamble choice. Our empirical analysis of 195 Italian firms listed on the Milan Stock Exchange between 2003 and 2015 shows that family firms derive more value and incur lower costs than nonfamily firms when they increase their cash holdings. We then delve deeper into family firms’ cash management choices by exploring how different levels of family control and influence as well as types of board governance arrangements moderate this relationship. The empirical results indicate that the positive effects of family ownership are more pronounced under a high level of family control and influence and with separation of the board chair and CEO positions.

Original languageEnglish
JournalJournal of Family Business Strategy
DOIs
Publication statusPublished - 1 Oct 2021

Keywords

  • Boards of directors
  • Cash holdings
  • Corporate governance
  • Mixed gamble
  • SEW

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