Preserving a Living Legacy : Marital Ownership and Risk Taking in Family Firms

We examine how ownership by couples affects risk taking in family firms. We find that firms co-owned by couples exhibit significantly lower stock return volatility. This result is robust to a difference-in-differences approach based on a smaller sample and an instrumental variable approach. Analysis based on alternative co-ownership suggests that the lower risk reflects couples' efforts to preserve a family legacy in the presence of children, rather than the role of gender. The risk reduction is stronger in industries with a higher female concentration and when the family is under majority shareholder pressure. We also show that this reduction is achieved by increased female empowerment in family firms