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Family Control and Capital Structure Choices

In: Capital Structure, Earnings Management, and Risk of Financial Distress

Author

Listed:
  • Pietro Gottardo

    (University of Pavia)

  • Anna Maria Moisello

    (University of Pavia)

Abstract

This empirical study analyses the effect of family governance on family firms financing behavior. It combines elements of the capital structure theories with the socioemotional wealth approach (SEW), linking the emotional endowment of firm governance and the financing behavior. Using a dataset of 2986 private and listed Italian medium-large firms over the period 2001–2010, we show that family control and influence, as key dimension of the SEW, shapes a firm’s capital structure choices. Multiple family members on the board and in executive positions, generational stage and ownership dispersion explain the results. A multiple presence of family members on the board and in executive positions has a signaling value for creditors. Moreover, we find that family businesses leverage is significantly affected by tangibility, legal structure, firm’s market share and the sensibility to credit restrictions.

Suggested Citation

  • Pietro Gottardo & Anna Maria Moisello, 2019. "Family Control and Capital Structure Choices," SpringerBriefs in Business, in: Capital Structure, Earnings Management, and Risk of Financial Distress, chapter 0, pages 13-40, Springer.
    • Handle: RePEc:spr:spbrcp:978-3-030-00344-9_2
    DOI: 10.1007/978-3-030-00344-9_2
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    Cited by:

    1. Samuel Baixauli-Soler, J. & Belda-Ruiz, María & Sánchez-Marín, Gregorio, 2021. "Socioemotional wealth and financial decisions in private family SMEs," Journal of Business Research, Elsevier, vol. 123(C), pages 657-668.
    2. 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.
    3. Oumaima Quiddi & Badr Habba, 2021. "Financial Behavior of Family Businesses: A Bibliometric and Systematic Literature Review," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(2), pages 75-92, April.

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