**5. Conclusions**

Numerous scholars have debated the uniqueness of the characteristics of family firms in terms of performance as opposed to their counterpart firms. The perception that families possess a more conservative attitude towards the management of the business makes family firms less risky. The risk profile of family business has been argued to be one of the characteristics significantly impacting the management of family business. In the light of the above, this paper has as its main objective to predict if family firms have lower leverage and manage their operations in a less risky manner as compared to their counterpart firms. The analysis conducted in this study yields some interesting results regarding the risk profile of the family firm.

Firstly, family firms have a lower financial structure than non-family firms. This indicates that most family firms use less debt financing than non-family firms, and as such maintain a lower level of debt. Regarding the profitability measure, this result suggests that most families tend to increase their reserves during the profitable cycle of their firms and later reinvest this reserved profit during economic downturn, rather than using debt finance. In other words, they employ their equity finance rather than debt finance for investment.

Secondly, family firms demonstrate lower risk as illustrated by the Altman Z-score. The Altman Z-score captures the financial risk inherent in a firm by examining four financial ratios (such as working capital/total assets, retained earnings/total assets, EBITDA/total assets, and market value of equity/book value of total debt). The significant difference between family firms and non-family firms on the Altman Z-score scale indicates that the lower inherent risk of family firms arises from the operation aspect of the business. Family firms managed their business operation with lower risk and are generally healthier financially than their counterpart firms. This explains the uniqueness of the capital structure of family businesses.

Lastly, the robust tests for the hypotheses using a sample of bankrupt firms in SABI reveal that the proportion of failure of family firms as opposed to theircounterpart firms is relatively low. Analyzing the bankruptcy files of firms from 2002 to 2014 shows a considerably low ratio of family firms at the 5% significance level. This affirms that the low risk illustrated in the Altman Z-score regression is consistent withthe lower ratio of family firms that were declared bankrupt over the study period. Lastly, the average debt at bankruptcy was lower and statistically significant for family firms as opposed to

non-family firms. Therefore, the findings herein confirm the hypothesis that family firms have a lower capital structure and maintain more financially healthy operations than non-family firms.

**Author Contributions:** Conceptualization, methodology, software, and formal analysis, L.A.T.N.; validation, visualization, supervision and project administration, H.M.S.d.O.; formal writing, software and funding acquisition, B.M.F.d.S.; investigation and data curation and methodology, L.M.P.; visualization, formal analysis and resources, S.A.M.C.B. All authors have read and agreed to the published version of the manuscript.

**Funding:** This research was funded by Center for Studies in Business and Legal Sciences (CECEJ) and Research Centre for the Study of Population, Economics and Society (CEPESE).

**Acknowledgments:** We will like to give special thanks to the reviewers for their valuable comments. More thanks to Professor Paul Ntungwe Ndue for his remarkable review and assistance. Lastly, thanks to the Center for Studies in Business and Legal Sciences (CECEJ) and Research Centre for the Study of Population, Economics and Society (CEPESE) for all the financial funding and support provided by its members during this research.

**Conflicts of Interest:** The authors declared no potential conflict of interest with respect to the research, authorship, and publication of this article.
