Family ownership and capital structure: evidence from ASEAN countries

Purpose - This paper examines the capital structure decisions of family firms in Southeast Asian (ASEAN) countries, considering the moderating effects of various firm-level and country-level factors. Design/methodology/approach - The authors apply various panel data models to analyze the data of listed firms in six ASEAN countries over the period of 2007–2017. Findings - The authors find that family firms tend to use more debt, particularly short-term debt, than non-family firms, which is explained by family owners' concern about the risk of losing control. The authors further document that family firms would use more debt when they have lower ownership concentration, have more family members on the board of directors and are young firms. The authors also find that the impact of family ownership on capital structure is moderated by the level of investors' legal protection of a country. Originality/value - This study, for the first time, provides comprehensive analyses of the financing decisions of family firms in ASEAN using a unique hand-collected dataset, which highlights that regional culture and market conditions can shape family firms' financing decisions. The authors also manage to mitigate the endogeneity issues that pervade most research on family firms. In addition, this research further explores the heterogeneous impacts of family control on capital structure given different levels of board involvement, firm age, ownership concentration, and most importantly, institutional differences. Such insights provide useful information for prospective investors as well as regulators to make more efficient investment and legislative decisions.