Inheritance Law and Investment in Family Firms
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.
Year of publication: |
2009
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Authors: | Ellul, Andrew ; Pagano, Marco ; Panunzi, Fausto |
Institutions: | Istituto Einaudi per l'Economia e la Finanza (EIEF) |
Saved in:
freely available
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