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Family-Centered goals, family board representation, and debt financing

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<mark>Journal publication date</mark>1/06/2019
<mark>Journal</mark>Small Business Economics
Issue number1
Volume53
Number of pages18
Pages (from-to)269-286
Publication StatusPublished
Early online date7/05/18
<mark>Original language</mark>English

Abstract

This study investigates the effect of both family-centered goals and family board representation (family member representation on the board of directors) on family firm capital structure. Based on a sample of 327 Belgian family SMEs, our findings show that family-centered goals indirectly affect the total debt rate through family board representation. More specifically, the results indicate that this mediating effect holds primarily for the short-term (vs. long-term) debt rate and for the financial (vs. nonfinancial) debt rate. Taken together, our findings suggest that the socioemotional wealth (SEW) perspective is relevant and fruitful to explain debt decisions in family firms. Our findings contribute to family business literature and enable scholars and practitioners to gain a better understanding of family firm capital structure decisions.