I ask whether family firms provide stability to their stakeholders at the expense of growth. I build a model where aversion to external finance induces family-minded entrepreneurs to invest in smaller and less risky projects. Predictions are tested using an original panel of French firms. The...

The conventional wisdom is that dynastic control provides sharp incentives to entrepreneurs ex-ante, when founders run firms in anticipation of their progeny being in charge once they retire, and bad management ex-post, when untalented heirs take over. Using data on Swedish private firms and the...

I ask whether family firms provide stability to their stakeholders at the expense of growth. I build a model where aversion to external finance induces family-minded entrepreneurs to invest in smaller and less risky projects.Predictions are tested using an original panel of French firms. The...