Exploring the link between family ownership and leverage: A mediating pathway through socioemotional wealth objectives. Articles uri icon

publication date

  • December 2023

start page

  • 1

end page

  • 50

International Standard Serial Number (ISSN)

  • 1863-6683

Electronic International Standard Serial Number (EISSN)

  • 1863-6691

abstract

  • This paper explores the relationship between family ownership and a firm"s leverage from the socioemotional wealth (SEW) theory. We propose that SEW objectives (i.e., family control, long-term horizon, and family firm reputation) might have a mediating effect on the family ownership-leverage link. In addition, we argue that an internal contingency—such as below aspiration performance—may moderate SEW"s influence on the family ownership-leverage relationship as a result of a shift in focus from non-economic to economic goals. Using a sample of European listed firms from 2011 to 2018, we find that the negative impact of family ownership on a firm"s leverage is mediated through SEW objectives. Moreover, our evidence suggests that a negative performance-aspiration gap weakens the mediating influence of these SEW objectives on leverage. Over all, our study reveals that SEW is a key channel which drives family firms" reluctance to leverage.

subjects

  • Business
  • Economics

keywords

  • leverage; family control; long-term horizon; family frm reputation; performance aspiration gap; mediating efect