Impact of family control on bank financing and the cost of debt: evidence from Canadian survey data

Amarjit Gill, Afshin Amiraslany, Harvinder S. Mand and Pritpal S. Bhullar

International Journal of Corporate Governance, 2022, vol. 13, issue 1, 64-83

Abstract: This study intends to investigate the impact of family control on bank financing and the cost of debt by utilising a survey research design to collect survey data. Canadian small family business owners were asked about their perceptions of family ownership, family members' firm management, CEO duality, bank financing, and debt cost. Our empirical analysis shows that family members' higher level of family ownership and firm management increases bank financing and decreases the cost of debt. A three-stage least square regressions show that family control/governance decreases the cost of debt through bank financing access. Thus, family control/governance plays a role in increasing bank financing and reducing debt costs for Canadian small family business firms. The results contribute to the literature on the relations between family control, bank financing, and debt cost. This study may motivate research scholars to develop further studies on family control/governance and the cost of capital.

Keywords: family control; family ownership; bank financing; cost of debt; Canada. (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcgov:v:13:y:2022:i:1:p:64-83

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