Family Successions and Corporate Decisions

Abstract

Existing theories have explained corporate investment decisions through agency-based theories, while dismissing family-owned businesses which comprise vast portion around the world. Using Korean Chaebol data, this study suggests nepotism-based agency explanation on investment decisions among family owned firms. This paper find family firms decrease investment during the successors entrance to the firm

especially when the heir is promoted. This paper offers nepotism-based interpretation of family firm investment decisions in order to mitigate adverse reactions from nepotism.