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The Effect of Family Ownership, Control and Management on Corporate Debt Structure– Evidence from Panel Fractional Data

Author

Listed:
  • Mário Augusto

    (CeBER and Faculdade de Economia, Universidade de Coimbra)

  • José Murteira

    (CeBER and Faculdade de Economia, Universidade de Coimbra, and CEMAPRE)

  • António Pedro Pinto

    (CI&DETS and Escola Superior de Tecnologia e Gestão de Viseu, Instituto Politécnico de Viseu)

Abstract

The present study examines the impact of family involvement on the debt structure of family businesses. Family corporate involvement is considered in three related but distinct dimensions: capital ownership, firm’s management and corporate control. The marginal effect of each of these three dimensions is specified as a unique regression parameter in a conditional mean model for the proportion of medium- plus long-term debt to total debt. This general strategy calls for an appropriate modelling and estimation approach, taking due account of the response variable’s inherent fractional definition and consequential nonlinear functional form of its conditional expectation, given covariates. Such an approach, combining a probit model for the equation of interest with a control function estimation method, is applied to a panel data set on Portuguese family businesses. Estimation results confirm the uniqueness of the impact of each of the three considered dimensions of families’ corporate involvement on the debt structure of firms.

Suggested Citation

  • Mário Augusto & José Murteira & António Pedro Pinto, 2018. "The Effect of Family Ownership, Control and Management on Corporate Debt Structure– Evidence from Panel Fractional Data," CeBER Working Papers 2018-11, Centre for Business and Economics Research (CeBER), University of Coimbra.
    • Handle: RePEc:gmf:papers:2018-11
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    More about this item

    Keywords

    Family firms; Management and control considerations; Debt maturity structure; Panel fractional data.;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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