2020 Volume 53 Issue 3 Pages 4-17
How do family firm CEOs’ expectations of their firms’ succession influence investment time horizon? By extending the socioemotional wealth perspective from the myopic loss aversion framework, we propose that family CEOs who confidently expect that their successors will be found are more likely to engage in long-term investment. Additionally, the likelihood of long-term investment is more positively associated with CEOs’ expectations of managerial succession by non-children than by their own children. We examine a sample of 410 small and medium- sized family manufacturers in Tokyo, Japan, and find a strong statistical support for the hypothesized relationships. These two findings shed light on a novel aspect of the accumulation and retention of socioemotional wealth based on the relationship between family firms’ managerial succession and investment time horizon.
