Abstract
This study aims to investigate the role of CEO succession in family business and the effect on financial risk. Using a Generalized Least Square (GLS) regression analysis and unbalanced panel data of 48 family firms, the stagnation, agency perspectives, and signaling model of their behavior were tested. This study finds that CEO turnover is negatively associated with firm’s financial risk. Furthermore, CEO descendants are more risk averse than CEO founders, and older CEOs are also more risk averse than younger CEOs. In addition, CEOs with higher education are also more risk averse. This implies that the Indonesian family firms are conservative towards financial risk. In relation to the stagnation perspective, the decrease in financial risk of family firms in Indonesia will be premature to be concluded that it will be in a stagnant phase.
| Translated title of the contribution | Risk preference of founder and descendant of indonesian family firms |
|---|---|
| Original language | Undefined/Unknown |
| Pages (from-to) | 414-425 |
| Number of pages | 12 |
| Journal | Polish Journal of Management Studies |
| Volume | 20 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 2019 |
Keywords
- Descendant
- Family firms
- Founder
- Risk preference
- Succession