Founding Family, Pyramid Structure and Debt Cost

Yizheng Qiu, Yueping Pan
2013 Proceedings of the 2013 Conference on Education Technology and Management Science   unpublished
With undeveloped financial market, private firms are facing severe financing constraints. Debt financing from banks is main financing channel for most private firms. Based on the three characteristics of the founding family firms: undiversified investments, long-term investment horizon, and reputation concerns, this paper investigates the impact of founding family on debt cost. We find that, compared to nonfamily firms, founding family firms enjoy lower debt cost and their debt cost shows lower
more » ... sensitivity to the pyramid structures. Our results show that founding family is an important variable that affects the firms' debt cost significantly.
doi:10.2991/icetms.2013.281 fatcat:5n2d5m4hdfgcflbmmghspnhkge