Year: 2012
Type: dissertation
Abstract: The dissertation examines corporate performance and capital structure of family firms,\ncontributing to the limited empirical research on family firms. Family firms are prevalent in\nnational economies all over the world. It is the prevalence that makes family firms receive\nincreasing attentions from academia. The dissertation consists of an introduction and three\nchapters. Each chapter is an independent paper. The first chapter is a joint work with Professor\nMorten Bennedsen and Dr. Markus Ampenberger. The version of in the dissertation will be\npublished as Chapter 6 in the forthcoming Oxford Handbook of Entrepreneurial Finance by\nOxford University Press. The second paper and third paper are single-authored papers.\nIn the first chapter, we discuss the capital structure of family firms, with a focus on the debtequity\nmix. Two parts comprise the chapter. In the first part, we provide a literature review on\nexisting theoretical and empirical research in the capital structure of family firms. The literature\nreview shows that the most important theories to explain capital structure in family firms seem to\nbe risk aversion, agency theory, and control considerations. We argue that risk aversion and\ncontrol considerations have opposing impacts on the optimal choice of debt leverage of family\nfirms. On one hand, controlling families of family firms are typically non-diversified investors\nwith most of their wealth and human capital tied to the company and consequently family firms\nuse less debt. On the other hand, controlling families want to maintain the control over their\ncompanies. This control consideration restricts the willingness to raise new equity outside the\nfamily and therefore often lead to a stronger dependence on banks and other debt instruments.\nThe literature review also shows that evidence on capital structure choices of family firms is\ninconclusive. Large-scale evidence on private family firms is almost missing.
Author: Haoyong Zhou
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2915887400