Raising capital for the family firm for sustainability: Whence the advantage?

Dong Xiang, Yuming Zhang, Andrew Worthington and Yanchu Liu

Technological Forecasting and Social Change, 2020, vol. 151, issue C

Abstract: Using a sample of Chinese small and medium-sized firms, we compare financing costs for family and nonfamily firms. We find that family firms enjoy relatively lower average financing costs through mitigating agency problems, the provision of more collateral, and the greater reliance on cheaper internal finance. Family firms also make use of their advantage in the pledged assets of family members, thereby making them less subject to financing constraints. We also find that the apparent inconsistency between the willingness and likeliness to rely on internal finance for family firms largely reflects the financial constraints of smaller firms.

Keywords: Family firms; Small and medium-size enterprises; Capital constraints; Cost of capital; Sustainability (search for similar items in EconPapers)
JEL-codes: C25 G32 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:151:y:2020:i:c:s004016251930277x

DOI: 10.1016/j.techfore.2019.119822

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