Work

Inheritance Law and Investment in Family Firms

Year: 2009

Type: preprint

Abstract: Entrepreneurs may be legally bound to bequeath a minimal stake to non-controlling heirs. The size of this stake can reduce investment in family firms, by reducing the future income they can pledge to external financiers. Using a purpose-built indicator of the permissiveness of inheritance law and data for 10,004 firms from 38 countries in 1990-2006, we find that stricter inheritance law is associated with lower investment in family firms, but does not affect investment in non-family firms. Moreover, as the model predicts, inheritance law affects investment only in family firms that experience a succession. (JEL G31, G32, G38).

Source: SSRN Electronic Journal

Authors: Mariassunta Giannetti, Luigi Guiso, Simon Johnson, Luc Laeven, Leonardo Madureira, David McLean, Atif Mian, Holger M. Mueller, Enrico Perotti, Paolo Pinotti, Raghu Rajan, Uday Rajan, Asim Khwaja

Language: English

Topic: Family Business Performance and Succession

Subfield: Organizational Behavior and Human Resource Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W3126085098

Cites: 24

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Related to: 10