IDEAS home Printed from https://ideas.repec.org/a/ibn/ijefaa/v9y2017i9p40-51.html
   My bibliography  Save this article

Agency Conflicts, Socioemotional Wealth, and the Debt Maturity Structure of Family Firms: A Critical Analysis

Author

Listed:
  • Oscar Domenichelli

Abstract

This paper aims to study the impact of the distinctive agency and socioemotional features of family firms on their debt maturity choices using a literature analysis of this topic, still substantially unexplored. Therefore, the paper examines the relationships between owners and managers; majority and minority shareholders, and family shareholders and family outsiders; and owners and creditors. The analysis suggests that the propensity of family businesses to use long-term debt depends on the generation leading the family firm, family blockholders, motivation for expropriating minority shareholders, family outsiders and their socioemotional orientation. Much still remains to be empirically studied. One interesting issue to explore further would be the influence of country-specific factors worldwide, in combination with firm-specific characteristics relating to agency conflicts and socioemotional wealth, on the debt maturity decisions of family firms, compared to non-family ones. Given the international importance of family firms, and their widespread presence and activity worldwide, additional empirical results on this topic may help governments adopt specific policies, that will better support family businesses, in light of their peculiar and unique economic and non-economic aspects.

Suggested Citation

  • Oscar Domenichelli, 2017. "Agency Conflicts, Socioemotional Wealth, and the Debt Maturity Structure of Family Firms: A Critical Analysis," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(9), pages 40-51, September.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:9:p:40-51
    as

    Download full text from publisher

    File URL: http://ccsenet.org/journal/index.php/ijef/article/view/69410/38088
    Download Restriction: no
    File URL: http://ccsenet.org/journal/index.php/ijef/article/view/69410
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Shleifer, Andrei & Vishny, Robert W., 1989. "Management entrenchment : The case of manager-specific investments," Journal of Financial Economics, Elsevier, vol. 25(1), pages 123-139, November.
    3. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    4. Chen, Sheng-Syan & Ho, Kim Wai & Yeo, Gillian H H, 1999. "The Determinants of Debt Maturity: The Case of Bank Financing in Singapore," Review of Quantitative Finance and Accounting, Springer, vol. 12(4), pages 341-350, June.
    5. René M. Stulz, 2000. "Financial Structure, Corporate Finance and Economic Growth," International Review of Finance, International Review of Finance Ltd., vol. 1(1), pages 11-38, March.
    6. Shuping Chen & Xia Chen & Qiang Cheng, 2008. "Do Family Firms Provide More or Less Voluntary Disclosure?," Journal of Accounting Research, Wiley Blackwell, vol. 46(3), pages 499-536, June.
    7. Lucian A. Bebchuk & Reinier Kraakman & George Triantis, 2000. "Stock Pyramids, Cross-Ownership, and Dual Class Equity: The Mechanisms and Agency Costs of Separating Control from Cash-Flow Rights," NBER Chapters, in: Concentrated Corporate Ownership, pages 295-318, National Bureau of Economic Research, Inc.
    8. Morck, Randall K. (ed.), 2000. "Concentrated Corporate Ownership," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226536781, September.
    9. Barclay, Michael J & Smith, Clifford W, Jr, 1995. "The Maturity Structure of Corporate Debt," Journal of Finance, American Finance Association, vol. 50(2), pages 609-631, June.
    10. Anon, 2002. "The Economy of Influence," Environment and Planning A, , vol. 34(8), pages 1331-1332, August.
    11. Andres, Christian, 2008. "Large shareholders and firm performance--An empirical examination of founding-family ownership," Journal of Corporate Finance, Elsevier, vol. 14(4), pages 431-445, September.
    12. Lucia Naldi & Carmelo Cennamo & Guido Corbetta & Luis Gomez–Mejia, 2013. "Preserving Socioemotional Wealth in Family Firms: Asset or Liability? The Moderating Role of Business Context," Entrepreneurship Theory and Practice, , vol. 37(6), pages 1341-1360, November.
    13. Carlos Benavides-Velasco & Cristina Quintana-García & Vanesa Guzmán-Parra, 2013. "Trends in family business research," Small Business Economics, Springer, vol. 40(1), pages 41-57, January.
    14. Straska, Miroslava & Waller, H. Gregory, 2014. "Antitakeover Provisions and Shareholder Wealth: A Survey of the Literature," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 49(4), pages 933-956, August.
    15. Charlie X Cai & David Hillier & Jun Wang, 2016. "The Cost of Multiple Large Shareholders," Financial Management, Financial Management Association International, vol. 45(2), pages 401-430, May.
    16. Lloyd P. Steier & Jess H. Chua & James J. Chrisman, 2009. "Embeddedness Perspectives of Economic Action within Family Firms," Entrepreneurship Theory and Practice, , vol. 33(6), pages 1157-1167, November.
    17. repec:bla:jfinan:v:58:y:2003:i:3:p:1301-1327 is not listed on IDEAS
    18. Rajan, Raghuram & Winton, Andrew, 1995. "Covenants and Collateral as Incentives to Monitor," Journal of Finance, American Finance Association, vol. 50(4), pages 1113-1146, September.
    19. Barth, Erling & Gulbrandsen, Trygve & Schonea, Pal, 2005. "Family ownership and productivity: the role of owner-management," Journal of Corporate Finance, Elsevier, vol. 11(1-2), pages 107-127, March.
    20. Rogoff, Edward G. & Heck, Ramona Kay Zachary, 2003. "Evolving research in entrepreneurship and family business: recognizing family as the oxygen that feeds the fire of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 18(5), pages 559-566, September.
    21. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. González, Maximiliano & Guzmán, Alexander & Pombo, Carlos & Trujillo, María-Andrea, 2012. "Family firms and financial performance: The cost of growing," Emerging Markets Review, Elsevier, vol. 13(4), pages 626-649.
    2. Moore, Jared A. & Suh, SangHyun & Werner, Edward M., 2017. "Dual entrenchment and tax management: Classified boards and family firms," Journal of Business Research, Elsevier, vol. 79(C), pages 161-172.
    3. Sabri Boubaker & Riadh Manita & Wael Rouatbi, 2021. "Large shareholders, control contestability and firm productive efficiency," Annals of Operations Research, Springer, vol. 296(1), pages 591-614, January.
    4. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, June.
    5. Yao Maurice & Yves Mard & Éric Séverin, 2015. "Maturité De La Dette Et Gouvernance D'Entreprise," Post-Print hal-01188805, HAL.
    6. Audrey Wenhsin Hsu & Sophia Hsintsai Liu, 2018. "Parent-subsidiary investment layers and the value of corporate cash holdings," Review of Quantitative Finance and Accounting, Springer, vol. 51(3), pages 651-681, October.
    7. Yen, Tze-Yu & Andre, Paul, 2007. "Ownership structure and operating performance of acquiring firms: The case of English-origin countries," Journal of Economics and Business, Elsevier, vol. 59(5), pages 380-405.
    8. Gao, Ning & Jiang, Wei & Jin, Jiaxu, 2023. "Disproportional control rights and debt maturity," International Review of Financial Analysis, Elsevier, vol. 85(C).
    9. Reajmin Sultana, 2021. "Family ownership, information problem and firm performance," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(6), pages 73-82, September.
    10. Cronqvist, Henrik & Nilsson, Mattias, 2005. "The choice between rights offerings and private equity placements," Journal of Financial Economics, Elsevier, vol. 78(2), pages 375-407, November.
    11. Bennedsen, Morten & Fan, Joseph P.H. & Jian, Ming & Yeh, Yin-Hua, 2015. "The family business map: Framework, selective survey, and evidence from Chinese family firm succession," Journal of Corporate Finance, Elsevier, vol. 33(C), pages 212-226.
    12. Chen, I-Ju & Wang, David K., 2019. "Real option, idiosyncratic risk, and corporate investment: Evidence from Taiwan family firms," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    13. 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).
    14. Erbetta, Fabrizio & Menozzi, Anna & Corbetta, Guido & Fraquelli, Giovanni, 2013. "Assessing family firm performance using frontier analysis techniques: Evidence from Italian manufacturing industries," Journal of Family Business Strategy, Elsevier, vol. 4(2), pages 106-117.
    15. Jang, Hasung & Kang, Hyung-cheol & Park, Kyung Suh, 2005. "Determinants of Family Ownership: The Choice between Control and Performance," CEI Working Paper Series 2005-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    16. Adhikari, Hari P. & Sutton, Ninon K., 2016. "All in the family: The effect of family ownership on acquisition performance," Journal of Economics and Business, Elsevier, vol. 88(C), pages 65-78.
    17. El Ghoul, Sadok & Guedhami, Omrane & Wang, He & Kwok, Chuck C.Y., 2016. "Family control and corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 73(C), pages 131-146.
    18. Cuadrado-Ballesteros, Beatriz & Rodríguez-Ariza, Lázaro & García-Sánchez, Isabel-María, 2015. "The role of independent directors at family firms in relation to corporate social responsibility disclosures," International Business Review, Elsevier, vol. 24(5), pages 890-901.
    19. Randall Morck & Bernard Yeung, 2003. "Agency Problems in Large Family Business Groups," Entrepreneurship Theory and Practice, , vol. 27(4), pages 367-382, October.
    20. Sumon Kumar Bhaumik & Andros Gregoriou, 2010. "‘Family’ Ownership, Tunnelling And Earnings Management: A Review Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 24(4), pages 705-730, September.

    More about this item

    Keywords

    family firms; non-family firms; agency conflicts; socioemotional wealth; debt maturity;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ijefaa:v:9:y:2017:i:9:p:40-51. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.