The financial structure and performance of owner–managed family firms: Evidence from the UK economy

Abstract

This paper offers a brief review of theoretical and empirical trends of the financial affairs of owner–managed family businesses [OMFBs] across their business life cycle – from closely held private SMEs to open quoted corporations. Comparative analysis of the financial structure and performance of family controlled firms versus the experience of their peers, establishes that OMFBs adhere fiercely to the principles of the pecking order theory – they prefer to finance their development in a hierarchical fashion using internal funds followed by external financing. In conclusion, some tentative policy implications from the perspective of owner/managers, service providers (financiers and advisors) and policy makers, are discussed.