29 Questions
What percentage of family businesses worry about innovation and technology?
80%
What percentage of family businesses have a clear ESG strategy in 2023?
15%
What hinders the progress of digital transformation in family businesses?
Resistance to change
What defines a family business according to Chua, Chrisman, and Sharma (1999)?
The business is governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families
What is the name of the scale that measures the extent of family influence on an enterprise?
F-PEC Scale
What does the F-PEC Scale measure?
The extent of family influence on an enterprise
What is resilience in the context of a company or organization?
The ability to persist in the face of substantial changes in the external business and economic environment
Why do family firms tend to seek sustainable solutions to current challenges?
Because they have a long-term orientation
What can be a limitation of moral obligations in family firms?
They can stifle growth
Why do family firms tend to act with independence?
Because they want to have flexibility and less external pressure
What is an example of a catastrophic event that family firms may need to be resilient to?
A COVID19 pandemic
Why do family firms tend to commit with strength during crises?
Because they want to fiercely fight for the company when it is under threat
What is a characteristic of family-owned businesses compared to DAX companies?
They create more jobs
What is the main trade-off considered in the trade-off theory?
Between interest tax shields and the cost of financial distress
What is a concern facing family-owned businesses according to a 2024 article?
A lack of succession planning
What is the sequence of financing options proposed by the pecking-order theory?
Internal equity, external debt, and new equity
Which of the following is an example of a family-owned business?
Liebherr
According to the trade-off theory, what would be the expected level of leverage for family firms compared to non-family firms?
Lower leverage due to higher costs of financial distress
What is a key assumption of the pecking-order theory regarding agency costs?
Agency costs are higher for external equity
What is a common challenge facing family-owned businesses in terms of downsizing?
Balancing stakeholder interests
According to a 2023 article, what was a significant event in the history of Liebherr?
The company reported a record sales and a significant decline in profits
What is the empirical evidence regarding the leverage of family firms compared to non-family firms?
The evidence is mixed, with some studies showing higher and others showing lower leverage
Who introduced the concept of agency costs in the context of firm financing?
Donaldson
What is a common characteristic of family-owned businesses compared to publicly traded companies?
They have a longer-term perspective
What is a primary concern for lenders when dealing with family firms?
Low bankruptcy risk
Why do family firms tend to have lower cost of debt?
Due to alignment of interests between family firms and lenders
What is a characteristic of family firms that influences the cost of debt?
Higher levels of family ownership
What is a consequence of bankruptcy for family firms?
It is more painful for family members
What is a key characteristic of family firms' investment strategy?
Risk-averse investments
Learn about the characteristics of family firms that enable them to be more resilient in the face of crises and substantial changes. Discover how their long-term orientation helps them withstand disruptions and catastrophic events.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
