Impact of financial management on perceived succession success of family businesses

This thesis examines the factors that influence perceived succession success in family-owned small businesses (F-OSBs), with a focus on the roles of financial management capabilities, financial heuristics, financial literacy, and fintech usage. Recognizing that family control over financial matters can lead to conflicts of interest and jeopardize financial stability, the study examines how financial management capabilities (audit, fraud, risk, and working capital management) impact succession outcomes, with fintech serving as a moderating mechanism to reduce familial influence and enhance longevity. Primary data were collected from successors in Malaysian F-OSBs, typically in chair or director roles, and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM). Findings indicate that audit and risk management positively impact perceived succession success, particularly with fintech support, while fraud and working capital management show mixed results. The study also explores financial heuristics—anchoring, herd bias, mental accounting, and risk aversion—revealing that while some biases positively correlate with perceived succession success, risk aversion negatively influences it. Financial literacy moderates specific heuristics, notably enhancing the influence of herd bias and risk aversion on succession. Additionally, financial socialization, mediated by financial literacy and fintech usage, plays a significant role in perceived succession success, especially for risk-averse successors who enhance financial literacy but are less inclined to adopt fintech. These findings highlight the importance of financial management skills, financial literacy, and selective fintech integration in achieving successful succession in Malaysian F-OSBs. These provide insights for families to tailor strategies that ensure business continuity across generations. This study is situated in the rich and diverse context of Malaysia, offering a distinctive and valuable lens through which to examine the phenomena under investigation.