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Article: Control considerations, creditor monitoring, and the capital structure of family firms

TitleControl considerations, creditor monitoring, and the capital structure of family firms
Authors
KeywordsCapital structure
Control considerations
Creditor monitoring
Family firms
International evidence
Issue Date2013
PublisherLawbook Co. The Journal's web site is located at http://onlineecom01.thomson.com.au/thomson/Catalog.asp?EES_CMD=SI&EES_ID=100217
Citation
Journal of Banking and Finance Law and Practice, 2013, v. 37 n. 2, p. 257-272 How to Cite?
AbstractIn this paper, I analyze the motives moving founders and their families to influence the capital structure decision. For this, I complement detailed corporate governance information for Germany with data from other countries. The results for the German bank-based financial system contradict prior findings for other institutional environments. According to these results, family firms in Germany rely less heavily on debt than non-family firms. Less surprisingly, the opposite holds true for the international dataset. Different empirical tests indicate that this puzzling result can be explained by control considerations. Founders and their families use the capital structure to optimize their control over the firm. However, whether family firms rely more or less on debt depends on the level of creditor monitoring in an institutional environment. These findings emphasize that control considerations of major shareholders are important-although often overlooked-determinants of the capital structure. © 2012 Elsevier B.V.
Persistent Identifierhttp://hdl.handle.net/10722/210044
ISSN

 

DC FieldValueLanguage
dc.contributor.authorSchmid, T-
dc.date.accessioned2015-05-21T03:01:58Z-
dc.date.available2015-05-21T03:01:58Z-
dc.date.issued2013-
dc.identifier.citationJournal of Banking and Finance Law and Practice, 2013, v. 37 n. 2, p. 257-272-
dc.identifier.issn1034-3040-
dc.identifier.urihttp://hdl.handle.net/10722/210044-
dc.description.abstractIn this paper, I analyze the motives moving founders and their families to influence the capital structure decision. For this, I complement detailed corporate governance information for Germany with data from other countries. The results for the German bank-based financial system contradict prior findings for other institutional environments. According to these results, family firms in Germany rely less heavily on debt than non-family firms. Less surprisingly, the opposite holds true for the international dataset. Different empirical tests indicate that this puzzling result can be explained by control considerations. Founders and their families use the capital structure to optimize their control over the firm. However, whether family firms rely more or less on debt depends on the level of creditor monitoring in an institutional environment. These findings emphasize that control considerations of major shareholders are important-although often overlooked-determinants of the capital structure. © 2012 Elsevier B.V.-
dc.languageeng-
dc.publisherLawbook Co. The Journal's web site is located at http://onlineecom01.thomson.com.au/thomson/Catalog.asp?EES_CMD=SI&EES_ID=100217-
dc.relation.ispartofJournal of Banking and Finance Law and Practice-
dc.subjectCapital structure-
dc.subjectControl considerations-
dc.subjectCreditor monitoring-
dc.subjectFamily firms-
dc.subjectInternational evidence-
dc.titleControl considerations, creditor monitoring, and the capital structure of family firms-
dc.typeArticle-
dc.identifier.emailSchmid, T: schmid@hku.hk-
dc.identifier.authoritySchmid, T=rp02028-
dc.identifier.doi10.1016/j.jbankfin.2012.08.026-
dc.identifier.scopuseid_2-s2.0-84869875237-
dc.identifier.volume37-
dc.identifier.issue2-
dc.identifier.spage257-
dc.identifier.epage272-
dc.publisher.placeAustralia-

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