Alfonso A. Rojo Ramirez

Socioemotional wealth’s implications in the calculus of the minimum rate of return required by family businesses’ owners

Abstract This paper demonstrates that the minimum rate of return (ke) required by family business shareholders is inversely related to the emotional endowment presented in these firms. After reviewing the socioemotional wealth (SEW) literature, we find empirical support to justify that different SEW dimensions influence ke. Findings from a population of 207 family firms show that the identification of family members with the firm and the renewal of family bonds with the firm through dynastic succession have consistently negative impacts on ke, while family control and influence have significantly positive impacts on ke.

Required and obtained equity returns in privately held businesses: the impact of family nature—evidence before and after the global economic crisis

Abstract This paper analyses the impact that family businesses have on the minimum rate of return required by owner–investors (ke) and on the equity returns (ROEaT) obtained in privately held businesses. This influence is analysed for an economic growth period (2002–2007) and for a crisis period (2008–2013) in the European context. Moreover, our study also explores the family nature through the heterogeneity among family firms in their required and obtained equity returns by considering the degree of family involvement in the ownership and management. Our findings reveal that while family businesses always have a negative and significant impact on ke regardless of the economic environment, they only have a positive and significant impact on ROEaT in economic upturns. Thus, non-economic goals do not necessarily imply underperformance but may involve a lower cost of equity capital in privately held family businesses than in privately held non-family businesses, which also leads to differences in the value creation.