Influence of Internal Factors on the Use of Equity-and Mezzanine-Based Financing in Family Firms

Family firms have an important role in economies around the globe. For instance, in Germany the majority of companies can be considered to be family firms, and other countries, particularly in continental Europe, show similar patterns. Family firms usually follow an overall business strategy targeted toward sustainability, which is a success model in line with the preferences of different stakeholders of the company as well as policy makers. However, the complex interplay of the family and the business may not only be a source of competitive advantage, but may also pose specific challenges on family firm owners. It is necessary to solve family conflicts and to focus on policies that safeguard the long-term existence of the company. In this context, financing decisions are important, as they are the basis for future company growth and survival. It is particularly important to understand internal drivers of financing decisions in the specific context of a family firm.