Abstract
In this article, we look at how a family firm signal affects decision making of nonprofessional investors. Grounded in prospect theory and supported by empirical evidence from a choice-based experimental study (N = 418) backed by a qualitative study, we demonstrate a behavioral bias induced by the family firm signal. This family firm bias shifts nonprofessional investors’ preferences toward the high-risk alternative in a choice situation. Accordingly, processing the family firm information seems to moderate risk aversion as risk avoidance is decreased in the gain domain, while risk seeking is reinforced in the loss domain due to trust and longevity associations tied to the family firm signal.
| Original language | English |
|---|---|
| Pages (from-to) | 386-408 |
| Number of pages | 23 |
| Journal | Entrepreneurship: Theory and Practice |
| Volume | 43 |
| Issue number | 2 Special Issue |
| DOIs | |
| State | Published - Mar 2019 |
| Externally published | Yes |
Keywords
- Decision making
- Experimental methods
- Family firm bias
- Family firm perception
- Prospect theory