In line with the prevalent notion that family businesses are more risk averse than non-family firms when facing strategic decisions that impact the long-term survival of the business, I hypothesize that the risk behavior resulting from the ownership structure of a firm affects its M&A activity. However, in order to gain a deeper understanding of the underlying risk mechanisms and theories, I differentiate between true family firms and lone founder firms throughout the course of this thesis. In a study of 177 firms listed in the German Prime Standard, I found that that true family firms show a lower propensity towards large target firm sizes when engaging in M&As as they want to avoid large, potentially destabilizing transactions. Furthermore, the presence of a family CEO in the firm reinforces this general tendency towards risk aversion. Although I did not find a significant relation between lone founder firms and target firm sizes, I empirically show that the presence of a founder CEO in these firms is associated with larger target firm sizes. Therefore, firms that are run by the founders themselves show a comparatively risk seeking behavior.
Inhaltsverzeichnis (Table of Contents)
- Abstract
- Table of Contents
- Table of Tables
- Table of Abbreviations
- Introduction
- Theoretical Background and Hypothesis Development
- Risk Behavior of TFFs and LFFs
- M&A Behavior of TFFs and LFFs
- Target Firm Size as a Proxy for the Acquirer's Risk
- Influence of Family and Founder CEOs on Risk and M&A Behavior
- Methodology
- Sample
- Data
- Dependent Variable
- Independent Variables
- Control Variables
- Analytical Approach
- Results
- First Regression: M&A Behavior of TFFs and LFFs
- Second Regression: Influence of Family and Founder CEOs
- Discussion
- Theoretical Implications
- Practical Implications
- Limitations
- Avenues for Future Research
- Conclusion
- References
- Appendix
- Affirmation in lieu of oath
- Appendix 1 (Table 6): First Correlation Table - Detailed
- Appendix 2 (Table 7): Second Correlation Table - Detailed
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis investigates the risk aversion of family firms when engaging in mergers and acquisitions (M&A) transactions. It aims to understand how the ownership structure of a firm, specifically the presence of a family or founder CEO, influences its risk behavior and M&A activity. The study focuses on the distinction between true family firms (TFFs) and lone founder firms (LFFs) to explore the unique dynamics of each type of firm in relation to risk and M&A decisions.
- Risk aversion in family firms
- Influence of ownership structure on M&A activity
- Role of family and founder CEOs in risk taking
- Target firm size as a proxy for risk in M&A transactions
- Empirical analysis of M&A behavior in German Prime Standard firms
Zusammenfassung der Kapitel (Chapter Summaries)
- Introduction: The introduction provides an overview of the research topic, outlining the main objectives and motivations for the study. It highlights the existing literature and the gap that this thesis aims to address.
- Theoretical Background and Hypothesis Development: This chapter establishes the theoretical framework for the study, examining existing research on risk behavior in family firms and the dynamics of M&A activity. It develops the hypothesis regarding the risk aversion of TFFs compared to LFFs, and the role of family and founder CEOs in influencing these decisions.
- Methodology: The methodology chapter details the research methods employed in the study, including the sample selection, data collection, variable definitions, and statistical analysis approach.
- Results: This chapter presents the findings of the empirical analysis, focusing on the relationship between ownership structure, risk behavior, and M&A activity. It discusses the results of two regression models examining the M&A behavior of TFFs and LFFs, and the influence of family and founder CEOs.
- Discussion: This chapter interprets the results in light of the theoretical framework and provides insights into the implications of the findings for both academia and practice. It also discusses the limitations of the study and suggests avenues for future research.
Schlüsselwörter (Keywords)
The key concepts explored in this study include family firms, lone founder firms, mergers and acquisitions, risk aversion, ownership structure, target firm size, CEO influence, and empirical analysis. The research focuses on understanding the relationship between these factors and the specific dynamics of M&A decisions in the context of family businesses.
- Quote paper
- Thilo Wenig (Author), 2018, Are Family Firms More Risk Averse Regarding M&A Transactions?, Munich, GRIN Verlag, https://www.grin.com/document/491544
