The relationship between financial risk management and succession planning in family businesses

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dc.contributor.authorMihaylov, G.S.
dc.contributor.authorZurbruegg, R.
dc.date.issued2021
dc.description.abstractPurpose – This article examines the relationship between financial risk management and succession planning in family businesses. Motivated by the Theory of Planned Behaviour, we hypothesize that the use of professional risk management practices is associated with an increased likelihood that businesses adopt professionalized approaches to succession planning. We then investigate if succession planning professionalization is, in turn, positively related to the financial performance of family businesses. Design/methodology/approach – We apply binary probit and ordered dependent variable regressions to unique data generated from a survey sample of Australian family businesses. To check the robustness of our results to potential endogeneity concerns we apply difference tests to propensity score matched sub-samples from our original cohort of respondents. Findings – The results show that, in contrast to verbal or absent succession arrangements, formal written succession plans are both positively associated with the use of financial risk management practices and with superior financial performance in family businesses. Originality/value – Our arguments and findings suggest that active financial risk management provides a platform for planning succession in family businesses, and that this links with improved short-term financial performance. In light of the critical role that succession plays in ensuring long-term business sustainability, our findings provide important and novel insights into the conditions under which family businesses are most likely to use formal professionalized succession planning.
dc.description.statementofresponsibilityGeorge Mihaylov and Ralf Zurbruegg
dc.identifier.citationInternational Journal of Managerial Finance, 2021; 17(3):438-454
dc.identifier.doi10.1108/IJMF-12-2019-0466
dc.identifier.issn1743-9132
dc.identifier.issn1758-6569
dc.identifier.orcidMihaylov, G.S. [0000-0001-8146-7881]
dc.identifier.orcidZurbruegg, R. [0000-0002-8652-0028]
dc.identifier.urihttps://hdl.handle.net/2440/140090
dc.language.isoen
dc.publisherEmerald
dc.relation.granthttp://purl.org/au-research/grants/arc/LP0990421
dc.rights© Emerald Publishing Limited
dc.source.urihttps://doi.org/10.1108/ijmf-12-2019-0466
dc.subjectRisk management; Financial performance; Succession planning; Family businesses
dc.titleThe relationship between financial risk management and succession planning in family businesses
dc.typeJournal article
pubs.publication-statusPublished

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