Cash Holdings, Use of Debt and Dividend Structure of Family Firms

Elena Smirnova, Sirousse Tabriztchi and Cary Lange

American Journal of Economics and Business Administration, 2015, vol. 7, issue 1, 1-10

Abstract: In this study we examine the relation between firm’s financial structure and family ownership. We develop a theoretical model of the precautionary cash holdings. Our empirical results show that the fraction of a company’s shares that are held by the founding family members or their descendants influences the use of cash and equivalents, dividend policy and debt structure of a firm. Our results are robust to different estimation methods and alternative model specifications. We find that family firms tend to rely less on long-term debt financing, pay fewer dividends and carry higher precautionary cash balances.

Keywords: Family Firms; Cash Holdings; Financial Structure (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:abk:jajeba:ajebasp.2015.1.10

DOI: 10.3844/ajebasp.2015.1.10

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