Board Connections and Debt Structure in Family Firms
45 Pages Posted: 12 Aug 2016 Last revised: 16 Sep 2017
Date Written: September 13, 2017
We investigate the effect of board connections on the debt structure of family firms. Using a comprehensive panel data set from Italy, our empirical evidence indicates that independent directors who sit on multiple boards facilitate family firms’ access to external debt, mostly in the form of trade debt. Exploiting geographic and temporal variations in credit supply, we find that board connections improve the ability of firms to withstand funding shortages. Overall, our findings are consistent with the view that independent directors sitting on multiple boards act as providers of information and resources along the supply chain.
Keywords: family firms, boards, debt, non-family directors, board interlocks
JEL Classification: G32, G34
Suggested Citation: Suggested Citation