Family ownership, control and corporate capital structure: An examination of small capitalization public firms
Purpose The purpose of this paper is to explain how family firm ownership and management control affect corporate capital structure strategy after controlling for other significant variables. The authors argue that, although family ownership has a positive effect on a firm's leverage, family control through the CEO position and equity performance moderate its impact. Design/methodology/approach Using a stratified random sample of 200 US public firms in the S P Small Cap 600 index from 1999 to 2007, this study uses random effect panel regressions to test the impact of family ownership on market value and book value debt ratios and the moderating effects of family control and equity performance after controlling for firm, industry, and macroeconomic variables. Findings The initial panel regression suggests that family ownership is not related to debt ratios. However, further examination with controls for family CEO and equity performance shows that family ownership is positively related to market an.