Capital structure decisions in family firms: Empirical evidence from a bank-based economy

Markus Ampenberger, Thomas Schmid, Ann Kristin Achleitner, Christoph Kaserer

Research output: Contribution to journalArticlepeer-review

101 Scopus citations

Abstract

This paper analyzes the question if and how founding families influence the capital structure decision of their firms. By using a unique, partially hand-collected panel dataset of 660 listed German companies (5,135 firm years) over the period 1995-2006, we come up with the following results: German family firms have significantly lower leverage ratios than non-family firms. With respect to the question how families influence the capital structure of their firms, we can show that the family impact is mostly driven via management involvement. In this context, we also detect that the presence of a founder CEO has a strong negative effect on the leverage ratio. Our results prove to be stable against a battery of robustness tests, including the influence of other types of blockholders and the firms' life cycle. Moreover, we use a propensity-score based matching estimator to alleviate concerns of reverse causality. Overall, our study suggests a strong, negative and causal relationship between family firm characteristics (especially family management) and the level of leverage.

Original languageEnglish
Pages (from-to)247-275
Number of pages29
JournalReview of Managerial Science
Volume7
Issue number3
DOIs
StatePublished - Jul 2013

Keywords

  • Agency conflicts
  • Capital structure
  • Family firms
  • Leverage

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