Title: Value drivers in Finnish family-owned firms: profitability, growth and risk

Authors: Erkki K. Laitinen

Addresses: Department of Accounting and Finance, University of Vaasa, P.O. Box 700FIN-65101 Vaasa, Finland

Abstract: This study provides new insights into value creation in family firms by analysing the interactions between value drivers and their determinants. Three value drivers are defined: profitability, growth and risk. The determinants include variables on performance measurement, control systems, perceived uncertainty, competition, success factors, products, strategy, size, industry, and age. The data, which were extracted from a survey of Finnish firms, consisted of responses from 59 Family-Owned Firms (FOFs) and 34 Non-Family-Owned Firms (NFOFs). The multivariate GLM was used as a statistical method. Empirical analysis showed that value creation logic in FOFs differs from that in NFOFs. In NFOFs value creation is more growth-oriented and in FOFs more profitability-oriented. Different determinants affect the value drivers in these groups. The financial leverage effect of debt on risk behaviour in FOFs was supported by the evidence. Finnish FOFs have increased return on equity at the expense of increased risk caused by additional debt.

Keywords: family-owned firms; FOFs; Finnish firms; value drivers; profitability; growth; risk; generalised linear modelling; GLM; Finland; value creation; family firms.

DOI: 10.1504/IJAF.2008.020235

International Journal of Accounting and Finance, 2008 Vol.1 No.1, pp.1 - 41

Published online: 09 Sep 2008 *

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