Capital Structure Decisions in Family Firms - Empirical Evidence from a Bank-Based Economy

European Finance Association (EFA), EFA 2009 Bergen Meetings

Review of Managerial Science, Forthcoming

33 Pages Posted: 23 Mar 2009 Last revised: 21 Feb 2013

See all articles by Markus Ampenberger

Markus Ampenberger

Technische Universität München - Center for Entrepreneurial and Financial Studies

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Christoph Kaserer

Technische Universität München (TUM)

Date Written: October 2011

Abstract

This paper analyzes the question if and how founding families influence the capital structure decision of their firms. By using a unique, partially hand-collected panel dataset of 660 listed German companies (5,135 firm years) over the period 1995 to 2006, we come up with the following results: German family firms have significantly lower leverage ratios than non-family firms. With respect to the question how families influence the capital structure of their firms, we can show that the family impact is mostly driven via management involvement. In this context, we also detect that the presence of a founder CEO has a strong negative effect on the leverage ratio.

Our results prove to be stable against a battery of robustness tests, including the influence of other types of blockholders and the firms’ life cycle. Moreover, we use a propensity-score based matching estimator to alleviate concerns of reverse causality. Overall, our study suggests a strong, negative and causal relationship between family firm characteristics (especially family management) and the level of leverage.

Keywords: family firms, capital structure, leverage, agency conflicts

JEL Classification: G32, G34

Suggested Citation

Ampenberger, Markus and Schmid, Thomas and Achleitner, Ann-Kristin and Kaserer, Christoph, Capital Structure Decisions in Family Firms - Empirical Evidence from a Bank-Based Economy (October 2011). Review of Managerial Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1364153 or http://dx.doi.org/10.2139/ssrn.1364153

Markus Ampenberger (Contact Author)

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstraße 21
München, 80333
Germany
++49 89 289 25483 (Phone)
++49 89 289 25488 (Fax)

HOME PAGE: http://www.cefs.de

Thomas Schmid

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Christoph Kaserer

Technische Universität München (TUM) ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25489 (Phone)
+49 89 289 25488 (Fax)

HOME PAGE: http://www.cefs.de

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