This home assignment deals with the question whether family firm “Mittelstandsanleihen” perform better than bonds from the same segment issued by non-family firms. This central issue is accompanied by the clarification of potential reasons for a possible superiority. After providing background information about family firms, small-and-medium-sized companies and corporate bonds, a small study on the most relevant German bond exchanges is presented. The result of the study supports an educated guess in favour for the family firms. Despite of positive robustness tests, the sole performance driven assessment should be enriched with additional creditworthiness data in further studies.
Table of Contents
1. Introduction
2. Family Firms
2.1 Definition
2.2 Economic Relevance and Characteristics
3. German Mittelstand
3.1 Definition
4. Corporate Bonds
4.1 Conceptual Insights
4.2 SMEs and Corporate Bonds
4.3 Drivers of Performance and Risks
5. Performance Analysis
5.1 Assumptions and Methodology
5.2 Review of the Result
5.3 Assessment of the Results’ Robustness
5.4 Summary
6. Discussion of the Result and Critical Appraisal
7. Conclusion
References
Research Objectives and Themes
The primary objective of this assignment is to investigate whether family-owned business (FOB) "Mittelstandsanleihen" (corporate bonds issued by SMEs) demonstrate superior performance compared to bonds issued by non-family firms. The study focuses on evaluating total returns for investors while accounting for risk factors and sectoral influences within the German bond market.
- Performance analysis of SME bonds issued in 2011 and 2012.
- Evaluation of "family firm" characteristics and their impact on debt instruments.
- Risk-return assessment of corporate bonds on German bond exchanges.
- Robustness testing of financial performance data.
- Critical appraisal of SME bond transparency and creditworthiness.
Excerpt from the Book
1. Introduction
It is quite popular saying that family firms or family-owned businesses (FOB) are more moderate entities, which are generally more stable due to direct shareholder influence. Besides profit orientation, the securing of an on-going business without taking high risks is seen as a major attribute (Stiftung Familienunternehmen 2011a, p. 10). The result of a study conducted by the “Stiftung Familienunternehmen” in 2009 showed that the crisis susceptibility of FOBs was quite gentle due to a long-term liquidity planning and relatively low debt-equity ratios (Stiftung Familienunternehmen 2009, pp. 15-16). Nevertheless family firms as a subcategory of business entities are very heterogynous in size, age, shareholder influence, financing etc., which makes it difficult to draw general conclusions (Stiftung Familienunternehmen 2011a, p. 186). Despite of the fact that the public interest in FOBs has risen in the past years, scientific research is still on a non-sufficient level (Bundesverband der Deutschen Industrie 2013, p. 7). The present assignment therefore aims to contribute to the current status of research especially in the field of finance of small-and-medium-sized enterprises (SME). As an alternative to bank loans, several SMEs have accessed regulated bond markets since 2010 for financing their business.
Summary of Chapters
1. Introduction: This chapter introduces the research context, outlining the hypothesis regarding the stability of family firms and defining the three core research questions concerning bond performance.
2. Family Firms: This chapter defines the criteria for identifying family-owned businesses and discusses their unique economic characteristics, opportunities, and challenges.
3. German Mittelstand: This chapter provides the definition of SMEs within the German economic context, noting the quantitative and qualitative criteria used for classification.
4. Corporate Bonds: This chapter explains the nature of corporate bonds, the market development for SME bonds in Germany, and the primary drivers of performance and risk for investors.
5. Performance Analysis: This chapter details the empirical methodology, presents the comparative study results for 2011 and 2012 emissions, and assesses the robustness of the findings.
6. Discussion of the Result and Critical Appraisal: This chapter critically evaluates the limitations of the study, including small sample sizes and potential sectoral biases that may affect the performance results.
7. Conclusion: This chapter synthesizes the study's findings, suggesting that while there is a tendency for better performance in family firms, investors should exercise caution and conduct thorough financial analysis.
Keywords
Family-owned business, FOB, Mittelstandsanleihen, SME, Corporate bonds, Bond performance, Debt instruments, Investment risk, Capital markets, German Mittelstand, Financial return, Creditworthiness, Insolvency, Asset management, Portfolio analysis.
Frequently Asked Questions
What is the core focus of this assignment?
The work examines whether family-owned businesses that issue "Mittelstandsanleihen" (SME corporate bonds) perform better for investors than non-family firms.
What are the primary themes discussed?
The core themes include the definition of family firms, the economic structure of the German Mittelstand, the mechanics of corporate bonds, and an empirical performance analysis of these bonds.
What is the primary research question?
The central question is: "Have Family Firm Mittelstandsanleihen performed better so far in the perspective of investors/creditors?"
Which methodology is employed for this study?
The author conducted an empirical study on the two most relevant German bond markets (Entry Standard and Bondm), comparing the total returns of family-owned and non-family-owned issuer portfolios for bonds issued in 2011 and 2012.
What does the main body of the text cover?
The main body covers theoretical foundations of family firms and SMEs, the introduction of corporate bonds as a financial instrument, and the step-by-step empirical performance benchmark and robustness testing.
Which keywords best characterize this research?
Key terms include "Family-owned business," "Mittelstandsanleihen," "SME," "Corporate bonds," and "Performance analysis."
How were "Family Firms" identified for this study?
The study adopted the European Commission's 2009 operational definition, which considers both the control perspective (direct/indirect major decision rights) and the governance involvement of family members.
Did the study conclude that family firms are always the better investment?
No. While the study indicates a tendency for better performance, the author stresses that the sample size is small and investors are advised to evaluate specific business models and financials rather than relying solely on the "family firm" status.
- Citation du texte
- Martin Wendt (Auteur), 2014, Do Family Firm Mittelstandsanleihen (convertible bonds) perform better?, Munich, GRIN Verlag, https://www.grin.com/document/280810
