Family Control and Family Firm Valuation by Family CEOs: The Importance of Intentions for Transgenerational Control

Thomas M. Zellweger (), Franz Kellermanns, James J. Chrisman () and Jess H. Chua ()
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Thomas M. Zellweger: Center for Family Business, University of St. Gallen, CH-9000 St. Gallen, Switzerland
James J. Chrisman: Department of Management and Information Systems, Mississippi State University, Mississippi State, Mississippi 39762; and Centre for Entrepreneurship and Family Enterprise, Alberta School of Business, University of Alberta, Edmonton, Alberta T6G 2R6, Canada
Jess H. Chua: Haskayne School of Business, University of Calgary, Calgary, Alberta T2N 1N4, Canada

Organization Science, 2012, vol. 23, issue 3, 851-868

Abstract: Family firms are thought to pursue nonfinancial goals that provide socioemotional wealth, but socioemotional wealth is feasible only with family control of the firm. Using prospect theory, we hypothesize that socioemotional wealth increases with the extent of current control, duration of control, and intentions for transgenerational control, thus adding to the price at which owners would be willing to sell their firms to nonfamily buyers. Findings from two countries show that current control has no impact, and duration of control has a mixed impact. However, intention for transgenerational control has a consistently positive impact on the perceived acceptable selling price.

Keywords: endowment effect; prospect theory; family business; socioemotional wealth; transgenerational control; firm valuation (search for similar items in EconPapers)
Date: 2012
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