A Real Options View on Minority Acquisitions by Family Firms

Wunnam Basit Issah; Thomas Clauss

doi:10.5465/AMBPP.2021.15908abstract

A Real Options View on Minority Acquisitions by Family Firms

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution

Abstract

Acquisitions involve high levels of uncertainty because resources are committed to risky acquisition activities even before the actual performance outcomes of these investments are known. In this study we examine the likelihood of using minority acquisitions as a risk reducing mechanism by family firms. Based on an analysis of a panel dataset of S&P 500 firms, we find that the acquisition decisions of family firms are consistent with the real options theory. We observe that family firms engage in related minority acquisitions because of their limited downside risk on socioemotional wealth.

Original language	English
Title of host publication	Academy of Management Proceedings
Volume	2021
DOIs	https://doi.org/10.5465/AMBPP.2021.15908abstract
Publication status	Published - 26 Jul 2020

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10.5465/AMBPP.2021.15908abstract

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title = "A Real Options View on Minority Acquisitions by Family Firms",

abstract = "Acquisitions involve high levels of uncertainty because resources are committed to risky acquisition activities even before the actual performance outcomes of these investments are known. In this study we examine the likelihood of using minority acquisitions as a risk reducing mechanism by family firms. Based on an analysis of a panel dataset of S&P 500 firms, we find that the acquisition decisions of family firms are consistent with the real options theory. We observe that family firms engage in related minority acquisitions because of their limited downside risk on socioemotional wealth.",

author = "Issah, {Wunnam Basit} and Thomas Clauss",

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AU - Issah, Wunnam Basit

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N2 - Acquisitions involve high levels of uncertainty because resources are committed to risky acquisition activities even before the actual performance outcomes of these investments are known. In this study we examine the likelihood of using minority acquisitions as a risk reducing mechanism by family firms. Based on an analysis of a panel dataset of S&P 500 firms, we find that the acquisition decisions of family firms are consistent with the real options theory. We observe that family firms engage in related minority acquisitions because of their limited downside risk on socioemotional wealth.

AB - Acquisitions involve high levels of uncertainty because resources are committed to risky acquisition activities even before the actual performance outcomes of these investments are known. In this study we examine the likelihood of using minority acquisitions as a risk reducing mechanism by family firms. Based on an analysis of a panel dataset of S&P 500 firms, we find that the acquisition decisions of family firms are consistent with the real options theory. We observe that family firms engage in related minority acquisitions because of their limited downside risk on socioemotional wealth.

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DO - 10.5465/AMBPP.2021.15908abstract

M3 - Conference contribution

VL - 2021

BT - Academy of Management Proceedings

ER -