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Reassessing debt-financing decisions in family firms: Family involvement on the board of directors and generational stage

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  • Comino-Jurado, María
  • Sánchez-Andújar, Sonia
  • Parrado-Martínez, Purificación

Abstract

This paper re-examines the factors influencing debt-financing decisions in family firms, considering the importance of socioemotional wealth and heterogeneity issues. In particular, we explore the board of directors and generational stage as key explicative factors of heterogeneity in family businesses. Focusing on a large sample of Spanish family firms, we estimate a partial least squares model, whose results show that the higher the level of family involvement on the board of directors and the lower the generational stage, the higher the debt level of the family firm. Consequently, in addition to traditional determinants of the level of debt, the above variables should be considered to better understand the heterogeneous debt-financing decisions of family firms, and this has practical implications for them and their internal and external relationships.

Suggested Citation

  • Comino-Jurado, María & Sánchez-Andújar, Sonia & Parrado-Martínez, Purificación, 2021. "Reassessing debt-financing decisions in family firms: Family involvement on the board of directors and generational stage," Journal of Business Research, Elsevier, vol. 135(C), pages 426-435.
    • Handle: RePEc:eee:jbrese:v:135:y:2021:i:c:p:426-435
    DOI: 10.1016/j.jbusres.2021.06.060
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    3. Wang, Joyce C. & Zhao, Yiyi & Sun, Sunny L. & Zhu, Jigao, 2023. "Female-friendly boards in family firms," Journal of Business Research, Elsevier, vol. 157(C).
    4. Martínez-Alonso, Rubén & Martínez-Romero, María J. & Rojo-Ramírez, Alfonso A., 2024. "Unveiling new opportunities: A mixed gamble approach to external search breadth within family firms," Technovation, Elsevier, vol. 129(C).
    5. Cambrea, Domenico Rocco & Ponomareva, Yuliya & Pittino, Daniel & Minichilli, Alessandro, 2022. "Strings attached: Socioemotional wealth mixed gambles in the cash management choices of family firms," Journal of Family Business Strategy, Elsevier, vol. 13(3).
    6. Fernando Muñoz-Bullón & Maria J. Sanchez-Bueno & Pilar Velasco, 2024. "Exploring the link between family ownership and leverage: a mediating pathway through socioemotional wealth objectives," Review of Managerial Science, Springer, vol. 18(11), pages 3203-3252, November.
    7. Ginesti, Gianluca & Ossorio, Mario & Dawson, Alexandra, 2023. "Family businesses and debt maturity structure: Focusing on family involvement in governance to explain heterogeneity," Journal of Family Business Strategy, Elsevier, vol. 14(2).

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