NDLI: Patient investment of family firms in the Japanese electric machinery industry

Content Provider	Springer Nature Link
Author	Asaba, Shigeru
Copyright Year	2012
Abstract	This study investigates distinctive investment behavior of family firms to distinguish among the diverse theories on the characteristics of family firms. Agency theorists emphasize reduced agency conflicts in family owned and managed firms due to alignment of interests between owners and managers. By contrast, family business researchers emphasize family owners’ priorities to retain control of the business and their risk preferences caused by long investment horizons and a desire for continuity. Drawing from agency and family business literatures, we set the hypotheses on two distinctive investment behaviors: aggressive investment and patient investment. Analyzing the data on investment of the listed firms in the Japanese electric machinery industry, we show that family firms invest more than non-family firms. Such aggressive investment can be caused by reduced agency conflicts as well as by owners’ risk preference. However, further analysis finds several results which are consistent not with the agency perspective but with the family business perspective. We show that family firms continue to invest under volatile and stagnant environments. Such patient investment can be caused by the risk preferences of family owners who have long time horizons and a desire for continuity. Therefore, not only ownership structure (equity share holding of management) but also being a family business (priority and risk preference of family owners) is essential characteristics of family firms which cause their distinctive investment behavior.
Starting Page	697
Ending Page	715
Page Count	19
File Format	PDF
ISSN	02174561
Journal	Asia Pacific Journal of Management
Volume Number	30
Issue Number	3
e-ISSN	15729958
Language	English
Publisher	Springer US
Publisher Date	2012-08-26
Publisher Place	Boston
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Family business Patient investment Agency conflict Priority and risk preference Management/Business for Professionals Business/Management Science
Content Type	Text
Resource Type	Article
Subject	Business and International Management Economics, Econometrics and Finance Strategy and Management

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1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
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