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Family-centered goals, family board representation, and debt financing

Author

Listed:
  • Vincent Molly

    (KU Leuven
    Antwerp Management School - Family Business Community)

  • Lorraine M. Uhlaner

    (EDHEC Business School)

  • Alfredo De Massis

    (Free University of Bozen-Bolzano
    Lancaster University Management School)

  • Eddy Laveren

    (Antwerp Management School - Family Business Community
    University of Antwerp)

Abstract

This study investigates the effect of both family-centered goals and family board representation (family member representation on the board of directors) on family firm capital structure. Based on a sample of 327 Belgian family SMEs, our findings show that family-centered goals indirectly affect the total debt rate through family board representation. More specifically, the results indicate that this mediating effect holds primarily for the short-term (vs. long-term) debt rate and for the financial (vs. nonfinancial) debt rate. Taken together, our findings suggest that the socioemotional wealth (SEW) perspective is relevant and fruitful to explain debt decisions in family firms. Our findings contribute to family business literature and enable scholars and practitioners to gain a better understanding of family firm capital structure decisions.

Suggested Citation

  • Vincent Molly & Lorraine M. Uhlaner & Alfredo De Massis & Eddy Laveren, 2019. "Family-centered goals, family board representation, and debt financing," Small Business Economics, Springer, vol. 53(1), pages 269-286, June.
    • Handle: RePEc:kap:sbusec:v:53:y:2019:i:1:d:10.1007_s11187-018-0058-9
    DOI: 10.1007/s11187-018-0058-9
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    More about this item

    Keywords

    Family business; Family-centered goals; Financing; Debt; Governance; Board of directors; Socioemotional wealth;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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