The Impact of Family Control of Firms on Leverage: Australian Evidence

33 Pages Posted: 28 May 2004

See all articles by Harijono

Harijono

Monash University - Department of Accounting; Satya Wacana Christian University - Faculty of Economics and Business

Mohammed Ariff

Monash University - Department of Accounting

George Tanewski

Monash University - Department of Accounting

Date Written: January 15, 2004

Abstract

This paper investigates whether leverage of family controlled firms differs from that of non-family controlled firms. Using data from publicly listed industrial firms in Australia traded over 1998 to 2002, family controlled firms appear to have higher levels of leverage than non-family counterparts. Results indicate that the families' incentive to use debt as a means of concentrating voting power outweighs the need to reduce debt in order to mitigate firm risk. Additional analyses show that the desire to use debt as a means for concentrating control is stronger for both smaller family firms and family firms operating in the mining sector. These results add new findings to the leverage literature.

Keywords: family firms, leverage, private benefits of control

JEL Classification: G32

Suggested Citation

Harijono, Harijono and Ariff, Mohammed and Tanewski, George, The Impact of Family Control of Firms on Leverage: Australian Evidence (January 15, 2004). Available at SSRN: https://ssrn.com/abstract=487706 or http://dx.doi.org/10.2139/ssrn.487706

Harijono Harijono (Contact Author)

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia

Satya Wacana Christian University - Faculty of Economics and Business ( email )

Diponegoro Street 52-60
Salatiga, Central Java 50711
Indonesia

Mohammed Ariff

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia

George Tanewski

Monash University - Department of Accounting ( email )

Building 11E
Clayton, Victoria 3800
Australia
+61 3 9903 2388 (Phone)
+61 3 9905 5475 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
478
Abstract Views
2,120
rank
66,913
PlumX Metrics