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

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.

Influência da gestão familiar na estrutura de capital

“…Em suma não se pode afirmar que a estrutura de gestão familiar (GF) está associada ao endividamento de longo prazo, já que esta variável estatisticamente não é significante. Os resultados convergem com Molly et al (2018) que investigaram empresas familiares belgas e observaram a falta de associação positiva entre o endividamento de longo prazo e a gestão familiar.…”

“…O presente resultado encontra sustentação em Molly et al (2018) quando, em pesquisa com empresas familiares belgas, constataram que a estrutura de gestão (centrada no objetivo ou representada no conselho de administração) afeta as decisões de endividamento de curto prazo com maior frequência do que as decisões da dívida de longo prazo.…”

Same same, but different: capital structures in single family offices compared with private equity firms

“…This finding is particularly salient in the context of the capital structure decisions of entrepreneurial families outside the family firm (i.e., in an SFO), as SFOs are at the intersection between financial decision-making and family cohesion and thus constitute a fruitful context for debt discussions (Rivo-López et al 2017;Wessel et al 2014). Furthermore, SFO decision-making is affected by the unique aspects of family involvement, such as combined ownership management (e.g., Hutchinson 1995;Pierce et al 2001), transgenerational intentions (e.g., González et al 2013;Schulze et al 2003), and the pursuit of noneconomic goals related to socioemotional wealth (SEW) (e.g., Gómez-Mejía et al 2007;Molly et al 2019). Surprisingly, academic knowledge on the influence of SFO-owning families on capital structure decisions as well as how entrepreneurial families' unique idiosyncrasies (e.g., owner-management, transgenerational intentions, SEW) affect such decisions is still limited.…”

Tax avoidance in different firm types and the role of nonfamily involvement in private family firms

“…Second, we contribute to the debate on the heterogeneity of family firms (Molly, Uhlander, De Massis, & Laveren, ). Our study provides (further) evidence that researchers must account for heterogeneity if they want to unpack the “black box” of tax avoidance in private family firms.…”