Foundation ownership and creditor governance: Evidence from publicly listed companies

Bonnie Buchanan and Caglar Kaya

Journal of International Financial Markets, Institutions and Money, 2024, vol. 93, issue C

Abstract: Foundation ownership represents an alternative corporate governance model to many conventional ownership structures. We examine the effect of foundation ownership on creditor governance. By utilizing an international sample of 411 publicly listed companies between 2003 and 2021, we document that foundation ownership leads to lower credit risk. This negative effect is robust across several different credit measures. Foundation-controlled companies also fare better than family-controlled and institutional investor-controlled companies. Specifically, foundation-controlled companies have better access to bank loans, with more favorable loan contracting conditions. Our results are supported by a series of robustness tests. The results also have policy implications as the European Commission recommends companies move away from a short-term focus.

Keywords: Foundation ownership; Credit risk; Ownership; Corporate governance; Ratings; Bank loans (search for similar items in EconPapers)
JEL-codes: G32 K20 L21 L31 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:93:y:2024:i:c:s1042443124000489

DOI: 10.1016/j.intfin.2024.101982

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