Financing decisions in private family firms: a family firm pecking order

Family firms are one of the most ubiquitous forms business organizations worldwide. Their survival and growth thus not only crucial for themselves but also overall economy. One factors that influence their development financing decisions. These decisions generally described through pecking order theory. However, much is known about applicability this theory in private family firms. Given shortcomings (both theoretically empirically) current literature, we analyze 1087 incremental from 277 to develop test a specific firm order. We integrate elements socioemotional wealth perspective explain preferred introduce capital into model. Our findings indicate first prefer internal financing, next debt followed by capital, last external capital. find SEW considerations play role decision. Especially retention control over aim pass generation appear an important determining dimensions ensure try avoid extra when it needed, they will opt This paper provides more insight reasoning behind How do finance investments? When looking ways investments, have several options. According traditional theories, follow so-called order: use funds, before turning financing. For firms, form organization worldwide, two aspects been ignored research until now. First, decision-making probably Next, itself can act as source finance, which yet accounted In research, take these issues account develop—theoretically empirically—a investigate thousand privately held results show bank debt, indicates future should pay attention peculiarities investigating