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17-02-2021

Influence of family-centered goals on dividend policy in family firms: A socioemotional wealth approach

Authors: María Belda-Ruiz, Gregorio Sánchez-Marín, J. Samuel Baixauli-Soler

Published in: International Entrepreneurship and Management Journal

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Abstract

Socioemotional wealth (SEW) preservation is likely to be a key determinant for family firms when shaping their dividend policy. This paper analyzes how family-centered goals reflected by SEW can influence dividend policy in private family firms and explores how family involvement in management, generational stage, and firm hazard might moderate these relationships. Results indicate a negative association between SEW preservation and both the likelihood of giving dividends and the amount of dividend paid. This negative relationship is stronger when the CEO is a family member, in early generational stages and when the firm faces greater performance hazard. The amount of dividend paid is also lower when there are family members in other top management positions apart from the CEO. The evidence provided thus suggests that the existing heterogeneity in dividend policy in privately held family firms is strongly driven by differences in SEW priorities.
Footnotes
1
First, a Cronbach Alpha of 0.880, reliability coefficient RHO of 0.905, and composite reliability (CR) of 0.941 provide support for reliability (Fornell and Larcker 1981). Second, as regards convergent validity, the index of average variance extracted (AVE) for family continuity is 0.666, and 0.534 for family enrichment, exceeding the 0.50 cutoff criteria (Hair et al. 2006). Third, discriminant validity is verified since the square root of AVE of each first-order factor (0.816 and 0.737 for the first and second factor, respectively) is higher than the correlation among these two factors (0.694). Furthermore, as shown in Table 2, CFA results suggest that both the second-order factor and the correlated two-factor models fit the data significantly better than the alternative one-factor model (all eight items are combined).
 
2
Following Vandemaele and Vancauteren (2015), the empirical models do not consider profitability measures (such as return on assets, ROA, or return on equity, ROE), in our case, due to potential multicollinearity problems with the existing control variables.
 
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Metadata
Title
Influence of family-centered goals on dividend policy in family firms: A socioemotional wealth approach
Authors
María Belda-Ruiz
Gregorio Sánchez-Marín
J. Samuel Baixauli-Soler
Publication date
17-02-2021
Publisher
Springer US
Published in
International Entrepreneurship and Management Journal
Print ISSN: 1554-7191
Electronic ISSN: 1555-1938
DOI
https://doi.org/10.1007/s11365-021-00741-x

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