International Business Management
ISSN: OnlineISSN: Print 1993-5250
Abstract
This study examines profitability and leverage of family firms among the leadership of the first (founder) second (sibling partnership) and third generation (cousin consortium). This study is conducted to prove the results of previous studies which show that the number of family firms will decrease when the third generation leads the company. The decrease of family firms is caused by many factors such as family conflict, founder’s distrust to successor, successor’s unwillingness to continue founder’s leading and different competence in managing company between founder and successor. By assuming that family firms have no problem with the three first factors, many family firms cannot continue the leadership from founder to successor because of two financial factors including profitability and leverage. First, family firms have no enough profitability to sustain. Second, family firms can go bankrupt because of running up huge debt. The population of this study was all three-generation family firms at Indonesia stock exchange whereas the samples were selected based on purposive sampling technique. To analyze panel data, this study collected data from 1982-2014. The findings of this study show that the mean value of family firm’s profitability led by sibling partnership is the highest. Furthermore, the mean value of leverage increases from founder to cousin consortium, yet the debt growth of family firms led by cousin consortium is the highest. It is concluded that the results of statistic tests of this study show several differences of profitability and leverage among founder, sibling partnership and cousin consortium.
How to cite this article:
Arif Singapurwoko. The Effect of Management of Founder, Sibling Partnership and
Cousin Consortium on Profitability and Leverage.
DOI: https://doi.org/10.36478/ibm.2017.1307.1315
URL: https://www.makhillpublications.co/view-article/1993-5250/ibm.2017.1307.1315