One more piece of the family firm debt puzzle: the influence of socioemotional wealth dimensions

Virginia Blanco-Mazagatos (), M. Elena Romero-Merino (), Marcos Santamaría-Mariscal () and Juan Bautista Delgado-García ()
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Virginia Blanco-Mazagatos: University of Burgos
M. Elena Romero-Merino: University of Burgos
Marcos Santamaría-Mariscal: University of Burgos
Juan Bautista Delgado-García: University of Burgos

Small Business Economics, 2024, vol. 63, issue 2, No 14, 849 pages

Abstract: Abstract The literature on debt financing in family firms is still inconclusive. Initial studies have usually focused on the influence of family involvement on firm’s debt levels by using the explanations of traditional economic theories. More recent studies have begun to focus on the role of family goals in family firm debt levels, particularly drawing on socioemotional wealth (SEW), which has helped in the development of financial theories of family business. Nevertheless, existing arguments have usually not considered SEW as a multidimensional construct that covers diverse family goals. In addition, literature has usually drawn on arguments considering SEW as a stock, but have not considered the importance given to SEW (SEWi), which specifically acknowledges SEW as a goal. Our paper responds to recent calls to extend theoretical arguments on the effect of diverse dimensions of SEWi on family firm behavior and to focus on the role of SEWi on the family firms’ debt. Specifically, we test how the CEOs’ assessment of the importance that their family attaches to the continuity, prominence, and enrichment dimensions of SEWi influences the level of debt. To do so, we use a sample of 126 Spanish unlisted family businesses. Our results show that the continuity dimension of SEWi leads family businesses to increase their debt level being a key determinant of this financing decision.

Keywords: Socioemotional wealth importance (SEWi); Debt; Family goals; Family continuity; Family prominence; Family enrichment (search for similar items in EconPapers)
JEL-codes: G32 L21 M19 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11187-024-00881-8

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