Corporate investment policy in the context of family firms

Abstract

This paper studies the impact of family-controlled firms on firms’ investment policy considering the 1999-2010 period. The results indicate that changes in firms’ investments are sensitive to internal resources, suggesting that corporate investments are constrained by internal liquidity. Comparing the family and the non-family firms’ results, we conclude that the investment cash flow sensitivity is higher for family controlled firms than for non-family counterparts, finding also some evidence that family firms’ corporate investment is more negatively related to crisis than non-family investments. During crisis period, family firms take a more conservative investment policy.