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2022-04-29

Leverage in family firms: The moderating role of female directors and board quality

Grounded in the agency, socioemotional wealth and resource dependence theories, we study how debt decisions are influenced by family control and how such relationship is moderated by an internal corporate governance mechanism, the quality of the board of directors. Our results show that family-controlled firms use more leverage at lower levels of family ownership to retain family control over the business, but once their socioemotional wealth is fulfilled at higher levels of ownership, they decrease leverage in pursuit of conservative financing policies. These actions are found to be moderated by board quality (i.e., experience and expertise) and female directors (predominantly independent).

Author - Jannine Poletti-Hughes , Beatriz Martínez Garcia
Journal - International Journal of Finance and Economics

Source - https://onlinelibrary.wiley.com/doi/10.1002/ijfe.2147