 Sibling co-management and cost of capital: Evidence from Chinese listed family firmsNianhang Xu, Danwen Song, Rongrong Xie and Kam C. Chan Journal of Corporate Finance, 2024, vol. 89, issue C Abstract: We study whether sibling co-management affects the cost of capital for family firms in China. We find that sibling co-management strongly correlates with a lower cost of capital. We identify three mechanisms through which sibling co-managers (including directors) influence the cost of capital: providing coinsurance, enhancing corporate governance, and facilitating communication with investors. Furthermore, the effect is more pronounced for firms operating in regions with weaker legal environments and firms with auditors from non-Big 4 accounting firms. However, sibling co-management may also hinder external financing due to higher uncertainty during family power transfer periods. In addition, the value of sibling co-management is more salient for financially constrained firms and those in which at least one of the co-manager siblings has a finance background. Overall, the findings suggest that family firms benefit from sibling co-management, resulting in a lower cost of capital, despite the challenges that arise during family power transfer. Keywords: Sibling co-management; Family firm; Cost of capital (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:89:y:2024:i:c:s0929119924001524 DOI: 10.1016/j.jcorpfin.2024.102690 Access Statistics for this article Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter More articles in Journal of Corporate Finance from Elsevier |
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