ROSALIA SANTULLI | Progetti

THE EFFECTS OF FINANCIAL CRISIS ON FAMILY AND NON-FAMILY FIRMS¿ CAPITAL STRUCTURE

Moving from these assumptions, we will test the differences in long-term debts and in firm’s capitalization (equity) of private family and non-family firms, in a situation of severe economic downturn. After establishing, during crisis, who suffers less credit crunch and who is better capitalized, we focus our attention within family firms, in order to tease out the leadership (family or non-family CEO) and family ownership (concentration or dispersion) conditions that allow specific governance configurations influencing, in turn, the levels of debts and equity. Our main findings suggest that a presence of a family CEO represents an advantage during crisis as well as more distributed family ownership among the three main shareholders. The data collection process will start with the scanning of the Bureau van Dijk Aida database. For a firm to be eligible for our study, it had to be active and unlisted, had to belong to manufacturing industry and had to be the global ultimate owner (GUO), meaning that they had to be the parent company with no other holding above them. We do not impose any restriction about firms’ size and legal form. For each firm in our sample, we will collect information about ownership structure and its evolution over time, with a complete account of the three largest owners; corporate governance information, including complete accounts about the structure, composition, and functioning of the board of directors (e.g., numbers of directors, female directors, family directors); performance data, including all balance sheet and income statement information, as well as financial ratios. To test our hypotheses, we will aplly a panel regresson model. This study will make several contributions to theory and practice. First, we contribute to the corporate finance literature on family firms and its quest about whether and how families influence firm’s financial decisions and capital structure (Bertrand & Schoar, 2006; Villalonga & Amit, 2006). We advance family business literature, suggesting the importance to consider external contingencies in order to assert the possible supremacy of family ownership and management. Besides, by observing that most of being family in adverse conditions, our study supports the ongoing debate on the usefulness of SEW as an emerging paradigm in the family business field (Miller & Le Breton-Miller, 2014). Moreover, focusing on the governance and leadership conditions, our study follows recent calls to investigate leadership also in family contexts (Simsek et al., 2015) and to strengthen the design of multi-level investigations considering different governance levels within the same firm (Miller et al., 2014; Sharma et al.; Yu, et al.,2012). Last, because this study investigates the reactions to crisis in private family firms, we also answer to the recent calls to deepen investigation on private family firms – PFFs (Carney et al., 2013), which have strong peculiarities if compared with their listed peers and, thus, can show different behavior during crisis (Minichilli et al., 2015).