Download the Paper (PDF format) - February 19, 2009 Tell a colleague about it. Printing Tips: Select 'print as image' in the Acrobat print dialog if you have trouble printing.

ABSTRACT:
Entrepreneurs may be constrained by the law to bequeath a minimal stake to non-controlling heirs. The size of this stake can reduce investment in family firms, by reducing the future income they can pledge to external financiers. Using a purpose-built indicator of the permissiveness of inheritance law and data for 10,245 firms from 32 countries over the 1990-2006 interval, we find that stricter inheritance law is associated with lower investment in family firms, while it leaves investment unaffected in non-family firms. Moreover, as predicted by the model, inheritance law affects investment only in family firms that experience a succession.

SUGGESTED CITATION:
Fausto Panunzi, Andrew Ellul, and Marco Pagano, "Inheritance Law and Investment in Family Firms" (February 19, 2009). Fondazione Eni Enrico Mattei Working Papers. Working Paper 266.
http://www.bepress.com/feem/paper266