Analysing the risk-return relationship in privately held firms: the contingent effect of being a family firm
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Rojo Ramírez, Alfonso Andrés; Martínez Victoria, María Del Carmen; Martínez Romero, María JoséFecha
2022Resumen
Purpose: The relationship between risk to return has been widely analysed in the scope of listed companies. However present literature leaves uncovered an important study area with regards to privately held firms. In order to cover this gap, this study analyses the risk-return trade-off in the context of private enterprises. Furthermore, we incorporate the contingent effect of being a family firm on the abovementioned relationship.
Design/methodology/approach: Using information from the SABI (Sistema de Análisis de Balances Ibéricos) database, a sample of 2,297 private manufacturing firms were analysed for the period of 2009-2016. So as to ascertain the proposed hypotheses, dynamic panel data methodology was applied. Specifically, we estimated the two-step general method of moments (GMM).
Findings: The obtained findings reveal that, according to prospect theory arguments, privately held firms adopt a conservative attitude toward risk when results are higher than a target level, while...
Palabra/s clave
Risk-return relationship
Privately held firms
Family firms
Risk-propensity
Strategic risk