Family firms, risk-taking and financial distress

  • Received March 30, 2017;
    Accepted June 12, 2017;
    Published June 30, 2017
  • Author(s)
    Pietro Gottardo , Anna Maria Moisello
  • DOI
    http://dx.doi.org/10.21511/ppm.15(2-1).2017.01
  • Article Info
    Volume 15 2017, Issue #2 (cont. 1), pp. 168-177
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    20 articles
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The authors investigate the question of whet her qualitative characteristics are likely to explain the survival of family firms in case of financial distress and whether these variables improve the explanatory power of quantitative variables in clarifying the different probability of distress between family and non-family firms. They focus their attention on the impact of the controlling owner and, using the Socioemotional Wealth theory (SEW), study the role of the family involvement in mitigating or accentuating the likelihood of distress. Using a dataset of 1,137 Italian family and non-family firms during 2004–2013, the authors found that family firms are significantly less likely to incur distress than non-family firms. The board dimension and the number of family members on board affect the probability of distress even controlling for some firm risk characteristics such as beta and ROA volatility, and there is also evidence of a gender mitigating effect in case of a female CEO.

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    • Table 1. Summary statistics of firm characteristics for family and non-family firms
    • Table 2. Duration independent hazard model with time varying covariates for the period 2004–2013
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