The Impact of Family Control and Influence on Leverage

This study analyses the effect of family control and influence on family firms’ leverage. It combines elements of capital structure theories with the Socioemotional wealth approach, linking the emotional endowment to leverage choices. Using a dataset of 2,992 private and listed medium-large Italian firms over the period 2001-2010 we analyze the heterogeneity within family businesses and between family and non-family firms. We show that the preservation of family endowments in the business is a key determinant of leverage. Its effect is strengthened by the presence of multiple family members on the board and weakened by ownership dispersion, regardless of listing