Family Governance Signals and Heterogeneous Preferences of Investors

Duncan, K., & Hasso, T., Family Governance Signals and Heterogeneous Preferences of Investors. Journal of Behavioral Finance, 1-15 (Forthcoming)

39 Pages Posted: 8 Mar 2018

See all articles by Keith Duncan

Keith Duncan

Bond University - Accounting

Tim Hasso

Bond University - Bond Business School

Date Written: February 28, 2018

Abstract

We explore if investors use signals of founding family governance (ownership, involvement in management, board representation) when making investment choices in an experimental setting. We link the literature on heterogeneous preferences of investors to signalling theory, and apply it in the context of founding family governance by exploring the presence of investor clusters with varying utility functions with respect to founding family governance. We show that nonprofessional investors use these signals in their investment choices. Latent class analysis identifies three distinct clusters within our sample that have conflicting utility curves with respect to founding family governance.

Keywords: family firms, investors, experiment, governance

Suggested Citation

Duncan, Keith R. and Hasso, Tim, Family Governance Signals and Heterogeneous Preferences of Investors (February 28, 2018). Duncan, K., & Hasso, T., Family Governance Signals and Heterogeneous Preferences of Investors. Journal of Behavioral Finance, 1-15 (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3131575

Keith R. Duncan

Bond University - Accounting ( email )

Gold Coast, QLD 4229
Australia
07 55952238 (Phone)

Tim Hasso (Contact Author)

Bond University - Bond Business School ( email )

Gold Coast
Australia

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