Firm Acquisitions by Family Firms: A Mixed Gamble Approach

61 Pages Posted: 28 Oct 2019

See all articles by Katrin Hussinger

Katrin Hussinger

ZEW – Leibniz Centre for European Economic Research

Abdul-Basit Issah

Copenhagen Business School

Date Written: 2019

Abstract

This study elucidates the mixed gamble confronting family firms when considering a related firm acquisition. The socioemotional and financial wealth trade-off associated with related firm acquisitions as well as their long-term horizon turns family firms more likely to undertake a related acquisition than non-family firms, especially when they are performing above their aspiration level. Post-merger performance pattern confirm that family firms are able to create long-term value through these acquisitions and by doing so they surpass non-family firms. These findings stand in contrast to commonly used behavioural agency predictions, but can be reconciled with theory through a mixed gambles’ lens.

Keywords: firm acquisitions; related firm acquisitions; mixed gamble; aspiration level; socioemotional wealth; value creation

JEL Classification: G34, L10, L20, M20

Suggested Citation

Hussinger, Katrin and Issah, Abdul-Basit, Firm Acquisitions by Family Firms: A Mixed Gamble Approach (2019). ZEW - Centre for European Economic Research Discussion Paper No. 19-044. Available at SSRN: https://ssrn.com/abstract=3476535 or http://dx.doi.org/10.2139/ssrn.3476535

Katrin Hussinger (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Abdul-Basit Issah

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Register to save articles to
your library

Register

Paper statistics

Downloads
7
Abstract Views
67
PlumX Metrics