Founding Family Heritage, Social Background and Risk Taking by Family Firms

Rama Seth, Ankit Singhal, S. R. Vishwanatha

Research output: Contribution to conferencePaperResearchpeer-review


This paper analyzes the relation between founding family’s heritage, social background and total firm risk using a sample of Indian firms from 2001 to 2015. We show that family firms have lower equity, cash flow and earnings volatility. This is particularly true of firms managed by older business families. There is some evidence that firms managed by family CEOs belonging to a business community are riskier. We document a non-monotonic relation between total firm risk and family ownership. We show that this is due to the non-linear relation between the extent of diversification, leverage, cash flow volatility, cash holdings and family ownership. Our results are generally robust to various tests for endogeneity, including instrumental variables regression, propensity score matching and firm fixed effects.
Original languageEnglish
Publication date2021
Number of pages44
Publication statusPublished - 2021
EventThe 56th AREUEA-ASSA Conference 2020: Part of the ASSA 2021 Virtual Annual Meeting - Online, WWW
Duration: 3 Jan 20215 Jan 2021
Conference number: 56


ConferenceThe 56th AREUEA-ASSA Conference 2020


  • Capital and ownership structure
  • Value of firms
  • Corporate governance

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