Investment Time Horizons in Family Versus Non-Family Firms and Among Family Firms with Governance Heterogeneity: Evidence from China

Investment time horizons (i.e. long-term and short term) remain under researched within the context of family versus non-family firms. This phenomenon also requires taking a closer look at the governance heterogeneity among family firms as it can lead to differences among family firms in terms of the temporal nature of the investments. Drawing upon a goal-based theoretical framework, we hypothesize that family firms are more likely to engage in long-term investments; and simultaneously, less likely to engage in short-term investments compared to non-family firms. We also hypothesize that the idiosyncratic investment time horizon in family business is primarily captured by de novo or "born as" family businesses, rather than family firms privatized and transformed from state-owned firms. A longitudinal analysis of 34,079 firm-year observations from 4,101 listed firms between 2007 and 2020 yields interesting findings with significant theoretical and practical implications.