We study the financial sophistication of small family firms. Sophistication refers to the use of complex financial products, such as options, swaps, debt restructuring, and merger and acquisition advisory. Our analysis is based on a unique dataset with detailed information on 544 Northern Italian firms. We find that the main drivers of financial sophistication are the generation of the family owners, the presence of an external (that is non-family) chief financial officer, and the existence of an external shareholder. We analyze how the impact of these factors on the level of sophistication varies across the following product classes: corporate finance, cash management, corporate lending, and risk management. We conclude that careful targeting by financial institutions on the basis on the firms’ characteristics identified in this study would have an important impact on the development of small family firms.
Are small family firms financially sophisticated?
CASELLI, STEFANO;DI GIULI, ALBERTA;GATTI, STEFANO
2006
Abstract
We study the financial sophistication of small family firms. Sophistication refers to the use of complex financial products, such as options, swaps, debt restructuring, and merger and acquisition advisory. Our analysis is based on a unique dataset with detailed information on 544 Northern Italian firms. We find that the main drivers of financial sophistication are the generation of the family owners, the presence of an external (that is non-family) chief financial officer, and the existence of an external shareholder. We analyze how the impact of these factors on the level of sophistication varies across the following product classes: corporate finance, cash management, corporate lending, and risk management. We conclude that careful targeting by financial institutions on the basis on the firms’ characteristics identified in this study would have an important impact on the development of small family firms.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.