The Role of Information Asymmetry in the Choice of Entrepreneurial Exit Routes
Journal
Journal of Business Venturing
ISSN
0883-9026
ISSN-Digital
1873-2003
Type
journal article
Date Issued
2014-11-08
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.
Language
English
Keywords
Entrepreneurial exit
exit routes
succession
information asymmetry
firm age
emotional attachment
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Elsevier Science Publ.
Publisher place
New York
Volume
29
Number
2
Start page
193
End page
209
Pages
17
Subject(s)
Eprints ID
217096
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