Transparency and Financing Choices of Family Firms

57 Pages Posted: 29 Nov 2012 Last revised: 6 Jan 2016

See all articles by Tai-Yuan CHEN

Tai-Yuan CHEN

Department of Accounting, HKUST Business School, Hong Kong University of Science & Technology

Sudipto Dasgupta

Chinese University of Hong Kong, Lancaster University, and CEPR

Yangxin Yu

City University of Hong Kong

Multiple version iconThere are 2 versions of this paper

Date Written: November 14, 2012

Abstract

While recent literature has documented that U.S. family firms differ markedly from their non-family counterparts, there is a paucity of evidence on how these firms differ in terms of their cost of capital or financial structure. In this paper, we show that family and non-family firms differ in their debt maturity and leverage ratios in a manner consistent with the higher expropriation potential of family firms. Moreover, while more transparency causes both family and non-family firms to increase the maturity structure of their debt and reduce leverage ratios, the effects are stronger for family firms.

Keywords: family firms, capital structure, corporate transparency, debt maturity

JEL Classification: G32, G34, M41

Suggested Citation

Chen, Tai-Yuan and Dasgupta, Sudipto and Yu, Yangxin, Transparency and Financing Choices of Family Firms (November 14, 2012). Journal of Financial and Quantitative Analysis (JFQA), Forthcoming. Available at SSRN: https://ssrn.com/abstract=2182326

Tai-Yuan Chen (Contact Author)

Department of Accounting, HKUST Business School, Hong Kong University of Science & Technology ( email )

Clear Water Bay
Kowloon
Hong Kong

Sudipto Dasgupta

Chinese University of Hong Kong, Lancaster University, and CEPR ( email )

CUHK, Cheng Yu Tung Building, Room 1224
Shatin, NT
Hong Kong
Hong Kong

Yangxin Yu

City University of Hong Kong ( email )

Hong Kong

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