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Transparency and financing choices of family firms

Research output: Contribution to Journal/MagazineJournal articlepeer-review

<mark>Journal publication date</mark>04/2014
<mark>Journal</mark>Journal of Financial and Quantitative Analysis
Issue number2
Number of pages28
Pages (from-to)381-408
Publication StatusPublished
<mark>Original language</mark>English


While recent literature documents that U.S. family firms differ markedly from their nonfamily 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 nonfamily 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 nonfamily firms to increase the maturity structure of their debt and reduce leverage ratios, the effects are stronger for family firms.