Do family firms pay less for external funding?

Muhammad Jahangir Ali, Seema Miglani, Man Dang (), Premkanth Puwanenthiren and Mazur Mieszko
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Seema Miglani: La Trobe University, Melbourne, VIC, Australia
Premkanth Puwanenthiren: University of Westminster, London, UK
Mazur Mieszko: IESEG School of Management, Paris la Défense, France

Australian Journal of Management, 2022, vol. 47, issue 2, 225-250

Abstract: We examine the impact of family control on the cost of raising external funds by family enterprises. Using a sample of Australian publicly listed firms, we find a significantly negative relation between cost of newly raised capital and family control. Moreover, we show that this relationship varies with the quality of corporate governance and the quality of firm’s information environment. Furthermore, we conduct several robustness checks and consistently find that our main results remain unchanged. Overall, our evidence suggests that family firms have easier access to external financing fostered by family involvement in the ownership and control. JEL Classification: G31; G32; M41; M42

Keywords: Australian family firms; corporate governance; cost of capital; financial analysts; institutional ownership (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:47:y:2022:i:2:p:225-250

DOI: 10.1177/03128962211018241

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