Transparency and Financing Choices of Family Firms

Past literature indicates that family firms were different from nonfamily firmsin term of performance, governess and disclosure. But there was very littleevidence which specified the financial structure of family firm. Maturity andleverage, two proxies are used to examine the financial structure of familyfirm in this particular study. This study shows that family firms are differentfrom non-family firms in terms of debt maturity and leverage. Moreover,transparency is negatively related to maturity which indicates that moretransparency decreases maturity, while family firms have more debt maturitywhich suggested that family firms are more relying on long-term debt andthere is a chance of expropriation in family firms due to less transparency.Furthermore, transparency is positively related with leverage which indicatesthat more transparency increases leverage, while family firms also have positive relationship with leverage which specifies that more transparency leadsfamily firms’ financial structure more toward debt