The Effect of Family Ownership, Control and Management on Corporate Debt Structure– Evidence from Panel Fractional Data

Mário Augusto (), José Murteira () and António Pedro Pinto
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Mário Augusto: CeBER and Faculdade de Economia, Universidade de Coimbra
José Murteira: CeBER and Faculdade de Economia, Universidade de Coimbra, and CEMAPRE
António Pedro Pinto: CI&DETS and Escola Superior de Tecnologia e Gestão de Viseu, Instituto Politécnico de Viseu

No 2018-11, CeBER Working Papers from Centre for Business and Economics Research (CeBER), University of Coimbra

Abstract: The present study examines the impact of family involvement on the debt structure of family businesses. Family corporate involvement is considered in three related but distinct dimensions: capital ownership, firm’s management and corporate control. The marginal effect of each of these three dimensions is specified as a unique regression parameter in a conditional mean model for the proportion of medium- plus long-term debt to total debt. This general strategy calls for an appropriate modelling and estimation approach, taking due account of the response variable’s inherent fractional definition and consequential nonlinear functional form of its conditional expectation, given covariates. Such an approach, combining a probit model for the equation of interest with a control function estimation method, is applied to a panel data set on Portuguese family businesses. Estimation results confirm the uniqueness of the impact of each of the three considered dimensions of families’ corporate involvement on the debt structure of firms.

Keywords: Family firms; Management and control considerations; Debt maturity structure; Panel fractional data. (search for similar items in EconPapers)
JEL-codes: C23 C25 G3 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2018-11
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-sbm
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