Young family firms: Financing decisions and the willingness to dilute control



Keasey, Kevin, Martinez Garcia, Beatriz and Pindado, Julio
(2015) Young family firms: Financing decisions and the willingness to dilute control. Journal of Corporate Finance, 34. pp. 47-63.

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Abstract

We study the relationship between leverage and the willingness of listed family firms to dilute control, proxied by the ownership of the main shareholder. We find that the main owner's stake positively impacts on leverage and that this impact is stronger when the business is a young family firm. Furthermore, the life cycle matters when analyzing this relationship. These results allow us to argue that owners with a greater stake prefer to raise finance via debt rather than dilute their position via equity, and that young family firms face a trade-off between their control risk aversion and the need for external financing.

Item Type: Article
Uncontrolled Keywords: young family firm, willingness to dilute control, life-cycle stages, financing behavior
Subjects: ?? HG ??
Depositing User: Symplectic Admin
Date Deposited: 22 Feb 2016 12:34
Last Modified: 17 Dec 2022 01:17
DOI: 10.1016/j.jcorpfin.2015.07.014
Related URLs:
URI: https://livrepository.liverpool.ac.uk/id/eprint/2051759