Succession is a key management challenge in family firms as it affects firm success and survival (e.g., Chittoor & Das, 2007). At this, succession involves a broad variety of management tasks such as successor selection, conflict handling or ownership transfer. However, all succession management efforts will be redundant if process-related financial requirements cannot be fulfilled (De Massis et al., 2008). Insufficient and inappropriate financing either impedes the succession process or constraints future firm growth. Accordingly, the question of how and why family firms employ a certain financial source for succession financing is important for successful succession outcomes.

So far, a vast body of research on family firm succession emerged; yet, most research has been focused on management transition (e.g., Sharma and Irving, 2005) and discussed the effects of personal, succession process factors and firm factors on succession outcomes. However, research on succession financing is virtually non-existent.