Financial behaviour of lebanese family firms during political crises

Abstract

During the last decade, Lebanese family firms have been experiencing many challenges related to two waves of political crises. The internal wave was after the assassination of PM Rafic Hariri and dated from 2005 till 2010. The external one began in 2011 due to the tension of the Syrian civil war. Based on 154 pairs of family and nonfamily firms, this study has the aim to explore the impact of both internal and external political troubles on financial dimensions (financial performance, capital structure and investment strategy) of Lebanese family firms. The results reveal that Lebanese family firms have a higher financial resistance than their counterparts. They outperform their nonfamily counterparts during internal and external political crises. They use debts, with more preference for long-term loans, to maintain their control over their business and preserve a dynamic investment strategy even in periods of internal and external political troubles.