Ownership concentration, contestability, family firms, and capital structure

Santos, Mário Sacramento; Moreira, António Carrizo; Vieira, Elisabete

doi:10.1007/s10997-013-9272-7

Cited by 65 publications

(72 citation statements)

References 109 publications

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“…However, conflicting views have argued that FCFs hold less debt levels than other firms, and these views are in line with the implications of trade-off theory (Ampenberger et al, 2013;McConaughy et al, 2001;Santos et al, 2014;Schmid, 2013). According to the trade-off theory of capital structure, companies seek to possess the debt level at which balance is achieved between the costs of potential financial distress and the tax advantages of extra debts (Myers, 2001).…”

Section: Discussionmentioning

confidence: 93%

The impact of family involvement in business on capital structure decisions: a literature review

Moussa

Elgiziry

2019

Investment Management and Financial Innovations

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Family-controlled firms are a unique form of business because of the special nature of its ownership structure, management style, and financing needs. Moreover, these firms face difficulty in achieving a balanced mix of available financing alternatives (i.e., debt and equity), and this mix has a direct impact on the firms’ profitability, risk, and value. Therefore, the purpose of this study is to review the literature on how family involvement in business via ownership, management, and control affects capital structure decisions. The review showed that in a comparison with nonfamily businesses, family-controlled firms on average have higher debt levels. Additionally, family ownership is positively associated with debt financing, and the participation of family members in a firm’s top management leads to an increase in the firm’s overall debt level. Insights generated from the current study highlight the critical influence of family involvement in business on key financial policies such as capital structure decisions.

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Section: Discussionmentioning

confidence: 93%

The impact of family involvement in business on capital structure decisions: a literature review

Moussa

Elgiziry

2019

Investment Management and Financial Innovations

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“…Indeed, high profitability can support their financial strategies based on self-financing (as described above). Existing research on family firms' capital structure (in non-crisis period) supports the existence of a negative relationship between firms' profitability and debt (Croci et al, 2011;López-Gracia & Andùjar, 2007;Santos et al, 2014).…”

Section: H2b: During Crisis Period Family Firm's Size Is Negatively mentioning

confidence: 98%

Capital Structure Determinants in Family Firms: An Empirical Analysis in Context of Crisis

Migliori¹,

Maturo²,

Paolone³

2018

IBR

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The purpose of this paper is to investigate the capital structure of family firms in a context of crisis. Specifically, it aims to discover whether and how the determinants of their capital structure have a different impact on firms' leverage before and during the recent global financial crisis. Considering the pecking order theory (POT), trade-off theory (TOT), and agency theory (AT), this study analyzes 1,502 Italian medium family firms comparing the pre-crisis (2005)(2006)(2007) and crisis (2008)(2009)(2010) periods. This research shows that that current liquidity, asset structure, and agency costs are the most important variables in influencing medium family firms' leverage, in both the pre-crisis and crisis periods. Moreover, during the crisis, agency costs increase and have a negative influence on the short-term leverage highlighting that crisis contingencies influence the agency-based effects on family firm's leverage. Furthermore, our findings highlight that a more exhaustive understanding of family firms' capital structure can be achieved through the combined use of different theories.

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“…The market debt ratio was chosen instead of book debt ratio due to its forward-looking character and proximity to internal value of the company (Santos, Moreira and Vieira, 2014;Welch, 2004).…”

Section: Methodsmentioning

confidence: 99%

The Importance of Estimation Method Choice for the Analysis of the Determinants of Capital Structure– An Example of Poland

Szomko

2017

EconWorld

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When assessing the influence of selected factors on capital structure, the researcher has to choose the set of determinants taken into account, their measurability and the estimation method for regression model. However, as shown by this data set, the results vary significantly when the model is estimated with ordinary least squares, fixed effects or generalized method of moments. Taking into account the properties of the data describing capital structure and its determinants, generalized method of moments should be the first choice for the model in question. As generalized method of moments estimators can easily generate invalid results, it is necessary to assess the validity of the model with suitable tests. This study compares the results of parameter and standard errors estimates for the capital structure models. Lagged debt ratio and size have positive impact on debt ratio while profitability, business risk and industry median debt ratio have negative impact for companies listed in Poland.

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Ownership concentration, contestability, family firms, and capital structure

Cited by 65 publications

References 109 publications

The impact of family involvement in business on capital structure decisions: a literature review

The impact of family involvement in business on capital structure decisions: a literature review

Capital Structure Determinants in Family Firms: An Empirical Analysis in Context of Crisis

The Importance of Estimation Method Choice for the Analysis of the Determinants of Capital Structure– An Example of Poland

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