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.
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Notes
While the financial crisis began in 2007 in the USA, in Belgium, the crisis did not begin until the last quarter of 2008. Furthermore, in Belgium, corporate credit supply was only affected from 2009 onwards (Vermoesen et al. 2013). Thus, the period covered in this research (i.e., through 2008) was still protected in Belgium from the major shifts taking place elsewhere.
The results from the robustness analyses are available from the corresponding author upon request.
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Molly, V., Uhlaner, L.M., De Massis, A. et al. Family-centered goals, family board representation, and debt financing. Small Bus Econ 53, 269–286 (2019). https://doi.org/10.1007/s11187-018-0058-9
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DOI: https://doi.org/10.1007/s11187-018-0058-9