Intergenerational Differences of Family Firms In Indonesia: Financial Structure And Performance

Baziedy Aditya Darmawan

DOI: https://doi.org/10.23917/benefit.v4i2.8283

Abstract

This study aims to investigates the differences between the first, second, and third generation in managing the family firms as reflected by their financial structure and performance. All family firms listed IDX were used as the sample. There are 51 family firms, henceforth, classified as the first, second, and third generation of family business. One-Way ANOVA was performed to test the differences of short-term debt, long-term debt, retained earnings, family ownership, and performance (ROA) among family firms managed by the first, second, and third generation.

The results of this study revealed that there are significant differences in term of short-term debt, long-term debt, retained earnings, and performance among family firms that managed by the first, second, and third generation. However, there’s no significant differences were found in term of family ownership among family firms managed by the first, second, and third generation. The differences of short-term debt and long-term debt shows decreased pattern. Whereas the differences of retained earnings, family ownership, and performance shows increase pattern. This findings are consistent with the pecking order theory in the firm’s life stage.

Keywords

Financial Structure, Performance, Family Firms, Generations

Full Text:

PDF

References

Ampenberger, M., Schmid, T., Achleitner, A.-K., & Kaserer, C. 2013. Capital structure decisions in family firms – empirical evidence from a bank-based economy. Review of Management Science, Vol. 7, Issue 3, pg. 247-275.

Anderson, R. C. and Reeb, D.M. 2003. Founding Family Ownership and Firm Performance : Evidence from the S&P 500. Journal of Finance, Vol. 58 (3), pg. 1301-1328.

Arosa, B., Iturralde, T., & Maseda, A. 2009. Ownership Structure and Firm Performance In Non-Listed Firms : Evidence From Spain. Proceedings World Family Business Research Conference of IFERA. June 2009. Limassol (Cyprus).

Brigham, E. F., & Houston J. F. 2013. Dasar-Dasar Manajemen Keuangan, edisi 11, Buku 2. Jakarta : Salemba Empat.

Bulan, L. & Yan, Z. 2009. The Pecking Order Theory and the Firm's Life Cycle. Banking and Finance Letters. Volume 1, Issue 3.

Carlock, R.S. & Ward, J.L. 2001. Strategic Planning for the Family Business. New York : Palgrave.

Coleman, S. & Carsky, M. 1999. Sources of capital for small family owned businesses: Evidence from the national survey of small business finances. Family Business Review, Vol. 12 (1), pg. 73–85.

Donnelley, R.G. 2002. The Family Business. In Family Business Sourcebook by Craig E. Aronoff, Joseph H, Astrachan, and John L, Ward (3rd edition), pg. 4-18.

Fama, E. & French, K. 2002. Testing Tradeoff and Pecking Order Predictions about Dividends and Debt. Review of Financial Studies Vol. 15 pg. 1-33.

Fosberg, R. H. 2004. Agency problems and debt financing: leadership structure effects. Corporate Governance. Vol. 4 (1) pg. 31-38.

Frelinghaus, A., Mostert, B., & Firer, C. 2005. Capital structure and the firm’s life stage. South African Journal of Business Management, Vol. 36(4), pg. 9-18.

Gersick, K., Davis, J., Hampton, M., Lansberg, I. 1997. Generation to generation: Life cycles of the family business. Boston, MA: Harvard Business School.

Gorriz, C.G., & Fumas, V.S. 2011. Growth strategies, professionalization, ownership structure, and performance across generations of family firm. African Journal of Business Management. Vol 5 (9), pg. 3589-3604.

Harjito, D. A. and Martono. 2012. Manajemen Keuangan Edisi ke 2. Yogyakarta : Ekonisia.

Her, M. M. & Williams, T. G. E. 2002. Founders Versus Descendants: Evidence Of The Taiwanese Publicly Traded Firms. International Business & Economic Research Journal. Volume 1, Number 7.

Johansson, D., Sjögren. H., Bjuggren, Carl M. 2009. Family Business, Employment, and GDP. Ratio Working Papers 145, The Ratio Institute.

Laveren, E., Molly, V., Jorissen, A. & Limère, A. 2004. Intergenerational differences in financial structure and performance of family firms: a comparison with non-family firms. Proceedings RENT XVIII Conference. p. 1-13. 2004.

Lee, J. 2004. The Effects of Family Ownership and Management on Firm Performance. SAM Advanced Management Journal; Autumn 2004; Vol. 69 (4).

Lester, D. L. & Parnell, J. A. 2004. The Complete Life Cycle of a Family Business. Proceedings of Association for Small Business & Entrepreneurship Annual Conference. Albuquerque, New Mexico, USA. 290-304

Lyagoubi, M. 2003. Family firms and financial behaviour: how the preferences of family shareholders influence firm financing?. The Family Business Network: 14th Annual World Conference, Lausanne.

Martinez, J. I., Bernhard, S.S., Bernardo F.Q. 2007. Family Ownership and Firm Performance : Evidence From Public Companies in Chile. Family Business Review, Vol. XX, No. 2.

McConaughy, D.L., Phillips, G.M. 1999. Founders versus descendants: The profitability, efficiency, growth characteristics and financing in large, public founding-family-controlled firms. Family Business Review, Vol. 12 (2), pg. 123–131.

Myers, S. 1984. The capital structure puzzle. The Journal of Finance, Vol. 39 (3), pg. 575–592.

_______. 2001. Capital Structure. Journal of Economic Perspectives. Vol. 15 (2): pg. 81-102.

Poza, Ernesto J. 2010. Family Business. 3rd edition. Thomson South-Western.

Riyanto, B. 2011. Dasar-Dasar Pembelanjaan Perusahaan, Edisi 4. Yogyakarta : BPFE.

Ruan, G., & Tian, G., Ma, S. 2011. Managerial Ownership, Capital Structure and Firm Value: Evidence from China’s Civilian-run Firms. Australasian Accounting Business and Finance Journal, Vol. 5 (3), pg. 73-92.

Santoso, C.S. 2010. Bisnis Keluarga pun Perlu Edukasi, retrieved from : http://economy.okezone.com/read/2010/07/08/320/350877/bisnis-keluarga-pun-perlu-edukasi

Sharma, P. 2003. Stakeholder Mapping Technique : Toward the Development of a Family Firm Tipology. Working Paper School of Business and Economics Wilfrid Laurier University-Waterloo.

Sindhuja, P.N. 2009. Performance and Value Creation: Family Managed Business Versus Non-Family Managed Business. Journal of Business Strategy, Vol. VI (3), pg. 66-80.

Singapurwoko, A. 2013. Indonesian Family Business vs. Non-Family Business Enterprises: Which has Better Performance?. International Journal of Business and Commerce,Vol. 2, No.5: pg. 35-43.

Sonfield, M., & Lussier, R. 2004. First-, Second-, and Third-Generation Family Firms: A Comparison. Family Business Review; Sep 2004; Vol. 17 (3) pg. 189.

______________________. 2009. Family Business Generational Stages: A Multi-National Analysis. Small Business Institute-National Proceedings Vol. 33, No. 1 Winter, 2009.

Ward, J.L. 1991. Creating effective boards of private Enterprise. San Francisco. CA : Jossey-Bass.

Ward, J. L. & Aronoff, C. E. 2002. Just What is a Family Business. In Family Business Sourcebook by Craig E. Aronoff, Joseph H. Astrachan, & John L. Ward. 3rd edition.

Wokukwu, K. C. 2000. Life Cycle and Capital Structure: Some Empirical Evidence. DBA dissertation. Wayne Huizenga School of Business and Entrepreneurship Nova Southeastern University.

Article Metrics

Abstract view(s): 208 time(s)
PDF: 139 time(s)

Refbacks

  • There are currently no refbacks.