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Foundation ownership and creditor governance: Evidence from publicly listed companies

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  • Buchanan, Bonnie
  • Kaya, Caglar

Abstract

Foundation ownership represents an alternative corporate governance model to many conventional ownership structures. We examine the effect of foundation ownership on creditor governance. By utilizing an international sample of 411 publicly listed companies between 2003 and 2021, we document that foundation ownership leads to lower credit risk. This negative effect is robust across several different credit measures. Foundation-controlled companies also fare better than family-controlled and institutional investor-controlled companies. Specifically, foundation-controlled companies have better access to bank loans, with more favorable loan contracting conditions. Our results are supported by a series of robustness tests. The results also have policy implications as the European Commission recommends companies move away from a short-term focus.

Suggested Citation

  • Buchanan, Bonnie & Kaya, Caglar, 2024. "Foundation ownership and creditor governance: Evidence from publicly listed companies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:intfin:v:93:y:2024:i:c:s1042443124000489
    DOI: 10.1016/j.intfin.2024.101982
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    Keywords

    Foundation ownership; Credit risk; Ownership; Corporate governance; Ratings; Bank loans;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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