Family Control and Capital Structure Choices

Pietro Gottardo and Anna Maria Moisello
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Pietro Gottardo: University of Pavia
Anna Maria Moisello: University of Pavia

Chapter Chapter 2 in Capital Structure, Earnings Management, and Risk of Financial Distress, 2019, pp 13-40 from Springer

Abstract: Abstract This empirical study analyses the effect of family governance on family firms financing behavior. It combines elements of the capital structure theories with the socioemotional wealth approach (SEW), linking the emotional endowment of firm governance and the financing behavior. Using a dataset of 2986 private and listed Italian medium-large firms over the period 2001–2010, we show that family control and influence, as key dimension of the SEW, shapes a firm’s capital structure choices. Multiple family members on the board and in executive positions, generational stage and ownership dispersion explain the results. A multiple presence of family members on the board and in executive positions has a signaling value for creditors. Moreover, we find that family businesses leverage is significantly affected by tangibility, legal structure, firm’s market share and the sensibility to credit restrictions.

Keywords: Family control; Family influence; Leverage; Capital structure choice; Ownership dispersion (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spbrcp:978-3-030-00344-9_2

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DOI: 10.1007/978-3-030-00344-9_2

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