In a context characterized by high ownership concentration, separation between ownership and control, diffusion of family-controlled firms, and pyramidal groups, ownership structure variables are likely to be strongly linked to leverage differently from the Jensen and Meckling (1976) and Jensen (1986) free cash flow effect and discipline of debt. The study shows that: (1) family firms are significantly more indebted than non-family counterparts, (2) separation between ownership and control leads to higher leverage ratios largely in family firms, (3) institutional investors acquire larger stakes in less leveraged firms. The results appear to be consistent with the use of debt as device to hold control and to exacerbate Type II agency issues. Family control affects both the target leverage and the speed of adjustment towards the optimal debt ratio. Family firms appear to be slower than non-family counterparts in converging on the target while firms significantly deviating from the optimal debt ratio show a faster reversal path.
Morresi, O., Naccarato, A. (2012). Capital Structures theories and convergence towards optimal debt ratios: Explaining the speed of adjustement in majority-controlled firms. In Proceedings of 16th Financial Management Association European Conference, Istanbul, Turkey, 6-8 June 2012.
Capital Structures theories and convergence towards optimal debt ratios: Explaining the speed of adjustement in majority-controlled firms
NACCARATO, ALESSIA
2012-01-01
Abstract
In a context characterized by high ownership concentration, separation between ownership and control, diffusion of family-controlled firms, and pyramidal groups, ownership structure variables are likely to be strongly linked to leverage differently from the Jensen and Meckling (1976) and Jensen (1986) free cash flow effect and discipline of debt. The study shows that: (1) family firms are significantly more indebted than non-family counterparts, (2) separation between ownership and control leads to higher leverage ratios largely in family firms, (3) institutional investors acquire larger stakes in less leveraged firms. The results appear to be consistent with the use of debt as device to hold control and to exacerbate Type II agency issues. Family control affects both the target leverage and the speed of adjustment towards the optimal debt ratio. Family firms appear to be slower than non-family counterparts in converging on the target while firms significantly deviating from the optimal debt ratio show a faster reversal path.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
