Family Control and the Sensitivity of Investment to Cash Flow: Evidence from a MultiEquation Modelling Approach

Johannes Beyenbach, Daniel Powell, Marc Steffen Rapp

Research output: Contribution to conferencePaperResearchpeer-review


We empirically examine the influence of family control on the sensitivity of a firm’s investment to cash flow. Implementing a dynamic multi-equation investment model, we find – in line with intuition but contrary to previous research – higher sensitivities for family-controlled firms. This pattern becomes stronger once we take into account financial constraints or use the 2008-2010 financial crisis as an exogenous liquidity shock. In addition, we find investments of family firms to be less sensitive to investment opportunities. Overall, our results are consistent with the view that family prefer to finance their investments by internal funds and adjust their investments accordingly.
Original languageEnglish
Publication date2018
Number of pages43
Publication statusPublished - 2018
EventEuropean Financial Management Association 2018 Annual Meetings - Università Cattolica del Sacro Cuore, Milan, Italy
Duration: 27 Jun 201830 Jun 2018
Conference number: 27


ConferenceEuropean Financial Management Association 2018 Annual Meetings
LocationUniversità Cattolica del Sacro Cuore
Internet address


  • Family control
  • Investment-cash flow sensitivity
  • Family firm
  • Financial flexibility
  • Germany

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