Do Family Firms Use More or Less Debt?

25 Pages Posted: 10 Jan 2010 Last revised: 14 Aug 2013

See all articles by Imen Latrous

Imen Latrous

Université du Québec à Chicoutimi (UQAC)

Samir Trabelsi

Brock University - Accounting

Date Written: January 10, 2010

Abstract

This paper investigates whether the identity of controlling shareholders influences the financing decision of the firm. In particular, we explore the impact of family control on firm debt levels. We also study the effect of family involvement in management on firm leverage. Using a sample of firms listed on the French stock market, our results show that family firms use less debt than non-family firms. Our findings are consistent with the hypothesis that family-controlled-shareholders prefer less debt as a mean to reduce firm risk. Furthermore, our results show that family firms that have a family member as CEO use more debt than family firms with outside CEOs.

Keywords: Governance, Family Firms, Leverage

JEL Classification: G30, G32, G14

Suggested Citation

Latrous, Imen and Trabelsi, Samir, Do Family Firms Use More or Less Debt? (January 10, 2010). Available at SSRN: https://ssrn.com/abstract=1534253 or http://dx.doi.org/10.2139/ssrn.1534253

Imen Latrous

Université du Québec à Chicoutimi (UQAC) ( email )

555 bd Université
Chicoutimi, G7H 2B1
Canada

Samir Trabelsi (Contact Author)

Brock University - Accounting ( email )

St. Catharines, Ontario L2S 3A1
Canada

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