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The Role of Information Asymmetry in the Choice of Entrepreneurial Exit Routes

abstract Our quantitative study investigates the determinants of internal versus external exit routes in family firms. Building on information asymmetry theory, we examine how an owner’s inferior knowledge about the abilities of potential external entrants (in contrast to family internal successors) renders a family internal transfer more likely. This information asymmetry, however, can be mitigated by activities such as owners’ screening and transfer candidates’ signaling efforts to reveal the candidates’ abilities. Our data exhibits a positive effect of signaling and an inverted U-shaped effect of screening on the probability of external exit routes. Firm age, as a driver of emotional attachment, weakens these effects.
   
type journal paper
   
keywords Entrepreneurial exit, exit routes, succession, information asymmetry, firm age, emotional attachment
   
project Unternehmensnachfolge
language English
kind of paper journal article
date of appearance 8-11-2012
journal Journal of Business Venturing
publisher Elsevier Science Publishers (New York)
ISSN 0883-9026
ISSN (online) 1873-2003
DOI 10.1016/j.jbusvent.2012.10.001
volume of journal 2014
number of issue 29
page(s) 193-209
review double-blind review
   
citation Dehlen, T., Zellweger, T., Kammerlander, N., & Halter, F. (2012). The Role of Information Asymmetry in the Choice of Entrepreneurial Exit Routes. Journal of Business Venturing, 2014(29), 193-209, DOI:10.1016/j.jbusvent.2012.10.001.