Doing the unexpected – Why German family firms differ from non-family firms in management accounting, planning, and risk integration

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Abstract

In the management accounting literature, planning and budgeting play important roles. In theory and practice, it is assumed so far that companies rely mainly on expected values in the context of planning. Scenarios and risk aspects (in the sense of volatility) play only a minor role. Against the background of new digital possibilities, the discussion on the integration of risk aspects in planning and management accounting is, however, gaining speed again. This applies in particular to family-owned companies, which have always been attested in the literature to have a more risk-averse management style than other companies. The article deals with the question of why companies have so far not or only poorly integrated risk aspects into operational planning and budgeting. This article deals with the consideration of risk aspects in corporate planning based on a sample of 261 German companies. The results of the empirical analysis show that family enterprises and non-family enterprises differ significantly from each other in terms of the consideration of risk aspects. While risk aversion should actually lead to family businesses integrating risks more closely, exactly the opposite is the case. A line of argumentation based on socioemotional wealth (SEW) is being used for this purpose.

Keywords: Management Accounting, Planning, Budgeting, Family Firms, Empirical Study

Authors’ individual contribution: Conceptualization – P.U.; Methodology – P.U. and R.R.; Formal Analysis – R.R.; Writing – Original Draft – P.U. and R.R.; Writing – Review & Editing – P.U. and R.R.; Visualization – P.U. and R.R.; Supervision – P.U. and R.R.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: M001, M40

Received: 27.07.2020
Accepted: 30.10.2020
Published online: 03.11.2020

How to cite this paper: Ulrich, P., & Rieg, R. (2020). Doing the unexpected – Why German family firms differ from non-family firms in management accounting, planning, and risk integration [Special issue]. Corporate Ownership & Control, 18(1), 226-241. https://doi.org/10.22495/cocv18i1siart1