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Founder Family Influence and Foreign Exchange Risk Management

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  • Tom Aabo
  • Jochen Kuhn, A.P. Møller - Maersk A/S, Denmark
  • Giovanni Zanotti, SDA Bocconi & Bergamo University, Italy

The purpose of this study is to explore the influence of founder families in medium-sized, manufacturing firms and to investigate the impact of such influence on risk management - more specifically foreign exchange hedging and speculation.

This empirical study uses survey data and publicly available data for descriptive analysis and ordinary least squares / ordered regression analysis.

We find that two thirds of medium-sized, manufacturing firms are founder family firms in which the founder of the firm or members of his/her family are active in the management team, are members of the board of directors, and/or are shareholders of the firm. We find no difference between such founder family firms and other firms in terms of the use / non-use decision related to foreign exchange derivatives but a marked difference in terms of the extent decision. Thus, founder family firms tend not only to hedge but also to speculate more extensively than other firms.

Research limitations/implications
The findings are based on medium-sized, manufacturing firms in Denmark.

This study provides empirical evidence on the influence of founder families in medium-sized firms (as opposed to large, listed firms in most other studies) and adds to the sparse literature on the impact of founder family influence on risk management.


Original languageEnglish
JournalInternational Journal of Managerial Finance
Pages (from-to)38-67
Publication statusPublished - 2011

    Research areas

  • Founder family firms, Foreign exchange risk management, Medium-sized firms

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