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Determinants of Capital Structure: Family Businesses versus Non-Family Firms

Author

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  • Miguel Angel Acedo-Ramirez

    (Universidad de La Rioja, Dpto. Economía y Empresa)

  • Juan Carlos Ayala Calvo

    (Universidad de La Rioja, Dpto. Economía y Empresa)

  • Ernesto Navarrete-Martinez

    (Caja Rural de Navarra)

Abstract

The study applies a GMM technique to a panel data sample of 2,093 private Spanish companies, 1,434 of which are family firms to investigate whether or not the capital structure of family business differs from that of non-family firms. The results show that family firms are more indebted than non-family firms. Moreover, the factors that have an influence on capital structure have different impacts on family firms and non-family firms. Furthermore, our findings also reveal that the financial structure (leverage ratio) of family firms changes with the size of the business and the firm’s life cycle, and that the variables that explain the financial behaviour of the family firms have different levels of importance, depending on the size of the business and the firm’s life cycle.

Suggested Citation

  • Miguel Angel Acedo-Ramirez & Juan Carlos Ayala Calvo & Ernesto Navarrete-Martinez, 2017. "Determinants of Capital Structure: Family Businesses versus Non-Family Firms," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 67(2), pages 80-103, April.
    • Handle: RePEc:fau:fauart:v:67:y:2017:i:2:p:80-103
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    3. Filipe Sardo & Elisabete S. Vieira & Zélia Serrasqueiro, 2022. "The role of gender and succession on the debt adjustments of family firm capital structure," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 12(2), pages 349-372, June.
    4. Nizar Dwaikat & Mohamed Imen Gallali & Mohammed Saadeh, 2021. "The Impact of Family Ownership on the Capital Structure of Palestinian Firms," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 32-52.
    5. Comino-Jurado, María & Sánchez-Andújar, Sonia & Parrado-Martínez, Purificación, 2021. "Reassessing debt-financing decisions in family firms: Family involvement on the board of directors and generational stage," Journal of Business Research, Elsevier, vol. 135(C), pages 426-435.
    6. Katarína Novotná & Ľubomír Gurčík & Zuzana Lušňáková, 2023. "Economic determinants of the development and sustainability of family farms in Slovakia," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 69(7), pages 291-299.
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    More about this item

    Keywords

    capital structure; family business; business size; business age; debt;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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