Investment Behavior of Large-Listed Family Businesses: Evidence from the Arab World

The literature on financial behavior of family businesses is still scarce and inconclusive, with a predominant focus on Western contexts. In this article, we address these gaps by extending the analysis to the investment behavior of family businesses in the Arab world. We examine the extent to which their investment behavior aligns with that of non-family counterparts along with their underlying drivers. We conduct a quantitative analysis of panel data of two samples of large listed family and non-family businesses covering the period from 2013 to 2019. Our findings reveal distinct characteristics of the investment behavior of family businesses, underscoring the need for context-specific interpretation. Even as they grow and go public, these businesses retain distinctive traits rooted in their family-business nexus. They tend to adopt a more cautious, risk-averse approach to investment compared to large non-family businesses. This conservative approach reflects their preference for preserving family control, often achieved by relying on internal financing rather than external funding. Moreover, our findings suggest a general alignment with pecking order theory in both large family and non-family businesses. Building on our contributions, we propose future research directions towards more exhaustive knowledge on financial behavior of family businesses in the Arab world.