THE EFFECT OF EMOTIONAL VALUE ON THE VALUE OF FAMILY BUSINESS UTJECAJ

Family firms are becoming a more and more popular topic to investigate because of the rising awareness regarding their importance for the economies. Characterized by the deep involvement of family members in the equity and decision-making processes through the managerial positions they usually have, the valuation of family firms requires a slightly different approach than the valuation of other organizational structures. Thus, the paper deals with the specific evaluation of family businesses from the owners’ perspective who tend to see their companies differently than others do. The authors try to find out whether there is a systematic relationship between the owner’s emotional investment and the total value of family businesses. The research used qualitative primary and secondary data in a thorough analysis from different standpoints (sociological, psychological, financial) based on which the authors recognized several differences regarding the evaluation of the family enterprise from the owner’s perspective and the total value of that enterprise. A case study was used in order to collect the data along with an unstructured interview with the owner of a family business operating in Bosnia and Herzegovina so as to get a more accurate view of the topic and to calculate the emotional value of the business. Results of the conducted study supported the hypothesis of this research, i.e. confirmed that the emotional value positively influences the total value of the family business. However, they did not support the hypothesis which states that the total value of the family business equals the selling price the owner is willing to accept.