Investment decisions in listed family firms: Risk aversion and emotional attachment

A critical concern of family firms’ behavior is the low propensity to invest and grow. Indeed, because of the undiversified nature of their investments and the unwillingness to dilute corporate control, family owners have incentives to influence investment decisions, limiting investment spending on long-term projects. This study aims at analyzing how a different board structure impacts on investment decisions. In particular, this study investigates whether board monitoring and the CEO’s emotional attachment might affect investment spending within family firms. Building on agency and stewardship constructs as complementary frameworks, we suggest that both board monitoring and the presence of an emotionally involved CEO may be positively associated with the level of investments in long-term projects.