FAMILY FIRMS AND THE COST OF BORROWING: EMPIRICAL EVIDENCE FROM EAST ASIA
Christophe Godlewski and
Nhung Le
Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg
Abstract:
We investigate the impact of family firms on the cost of borrowing in East Asia. We find consistent evidence that family firms pay significantly higher loan spreads than nonfamily firms. This effect is stronger in environments with weaker investor protection. Furthermore, covenants help reduce the cost of debt while collateral is embedded in relatively riskier borrowers. We also find that small, highly leveraged borrowers pay higher loan spreads, while they are lower for firms with more tangible assets and lower probability of default risk. Our results survive several robustness checks related to family firm classification and endogeneity issues.
Keywords: Family firm; loan spread; East Asia. (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cfn and nep-fdg
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http://ifs.u-strasbg.fr/large/publications/2021/2021-06.pdf (application/pdf)
Related works:
Journal Article: Family firms and the cost of borrowing: empirical evidence from East Asia (2022) 
Working Paper: Family firms and the cost of borrowing empirical evidence from East Asia (2021) 
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2021-06
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