Family Firms Are Risk-Averse

Family Firms Are Risk-Averse

Jan. 31, 2023

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When wealthy families invest heavily into a single firm, how does this impact the firm’s risk-taking behavior? Ron Anderson finds strong evidence that family firms assume less exchange rate risk than non-family firms.


Risk aversion protects the founding family, who would face significant losses if the firm suffers. However, other shareholders might benefit from more risk tolerant strategies and lack decision-making power because they are not part of the founding family.