How family control promotes firm value: the mediating role of leverage

Rizqa Anita (), Giri Suseno (), Muhammad Rasyid Abdillah () and Nor Balkish Zakaria ()
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Rizqa Anita: Universitas Lancang Kuning
Giri Suseno: Universitas Lancang Kuning
Muhammad Rasyid Abdillah: Universitas Lancang Kuning
Nor Balkish Zakaria: Universiti Teknologi MARA

International Journal of Disclosure and Governance, 2025, vol. 22, issue 3, No 3, 619-628

Abstract: Abstract Family companies prefer to increase debt rather than issue shares because it will reduce their control in the company. The purpose of this study was to determine the influence of the family control on firm value. Especially, this research was to examine the mediating role of leverage between family control and firm value. The data used in this study are 690 companies listed on the Indonesia Stock Exchange. This study were analyses using the partial least squares (Warp PLS 7.0 software). These findings indicate that family control has a positive effect on leverage and firm value. The results also show that the leverage mechanism is able to mediate between family control and firm value. This study contributes to understanding the mechanism of leverage in family firms in mediating using agency theory and trade-off theory.

Keywords: Family control; Leverage; Firm value (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41310-024-00259-y

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