Transparency and Financing Choices of Family Firms

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