Purpose: There is still an ongoing debate on the value relevance of capital structure and its determinants. Recently the issue has been explored in family firms after being explored in mature firms. This paper investigates the role of institutional investors and the firm's innovation activity in influencing the firm's decision and ability to acquire debt capital. Design/methodology/approach: A large sample of 700 privately-held family firms in Italy from 2010 to 2019. Two analysis techniques are used: panel analysis and path analysis. The value of debt and the debt ratio are used as leverage measures. The value of patent (as a proxy for innovation) and institutional investor are the explanatory variables. Findings: The results show that institutional investors have no relationship with financial leverage measures except when controlling for an interaction variable (Institutional investors × Lombardy region). The patent value is positively correlated with debt; however, the ratio patent-to-asset is negatively related to financial leverage indicating higher risk exposure. The nonlinearity test demonstrates a turning point when the relationship between patent value and debt inverts. Practical implications: Firms should monitor their innovation activity since excessive innovation increases risk exposure and affects financing opportunities and value. The involvement of institutional investors does not always enhance value. Originality/value: Existing literature focuses separately on family firm innovations and financial leverage as outcome variables, emphasizing the role of institutional investors in both fields by adopting agency theory and socioemotional wealth framework. In this study, the authors go further by merging both relationships, investigating the dynamics of the institutional-family firm innovation relationship in influencing the firm's capital structure. The authors contribute to the ongoing debate by providing original findings on capital structure, governance and innovation, supported by rigorous methods to enhance family firms' decision-making.

Harasheh, M., Capocchi, A., Amaduzzi, A. (2022). Capital Structure in Family Firms: The Role of Innovation Activity and Institutional Investors. EUROMED JOURNAL OF BUSINESS, 1-25 [10.1108/EMJB-12-2021-0191].

Capital Structure in Family Firms: The Role of Innovation Activity and Institutional Investors

Capocchi, A
Secondo
;
Amaduzzi, A
Ultimo
2022

Abstract

Purpose: There is still an ongoing debate on the value relevance of capital structure and its determinants. Recently the issue has been explored in family firms after being explored in mature firms. This paper investigates the role of institutional investors and the firm's innovation activity in influencing the firm's decision and ability to acquire debt capital. Design/methodology/approach: A large sample of 700 privately-held family firms in Italy from 2010 to 2019. Two analysis techniques are used: panel analysis and path analysis. The value of debt and the debt ratio are used as leverage measures. The value of patent (as a proxy for innovation) and institutional investor are the explanatory variables. Findings: The results show that institutional investors have no relationship with financial leverage measures except when controlling for an interaction variable (Institutional investors × Lombardy region). The patent value is positively correlated with debt; however, the ratio patent-to-asset is negatively related to financial leverage indicating higher risk exposure. The nonlinearity test demonstrates a turning point when the relationship between patent value and debt inverts. Practical implications: Firms should monitor their innovation activity since excessive innovation increases risk exposure and affects financing opportunities and value. The involvement of institutional investors does not always enhance value. Originality/value: Existing literature focuses separately on family firm innovations and financial leverage as outcome variables, emphasizing the role of institutional investors in both fields by adopting agency theory and socioemotional wealth framework. In this study, the authors go further by merging both relationships, investigating the dynamics of the institutional-family firm innovation relationship in influencing the firm's capital structure. The authors contribute to the ongoing debate by providing original findings on capital structure, governance and innovation, supported by rigorous methods to enhance family firms' decision-making.
Articolo in rivista - Articolo scientifico
Debt; Family firms; Governance indicator; Innovation activity; Italy; Leverage; Panel analysis; Path analysis;
English
1
25
25
Harasheh, M., Capocchi, A., Amaduzzi, A. (2022). Capital Structure in Family Firms: The Role of Innovation Activity and Institutional Investors. EUROMED JOURNAL OF BUSINESS, 1-25 [10.1108/EMJB-12-2021-0191].
Harasheh, M; Capocchi, A; Amaduzzi, A
File in questo prodotto:
File Dimensione Formato  
Final version.pdf

accesso aperto

Tipologia di allegato: Publisher’s Version (Version of Record, VoR)
Dimensione 728.44 kB
Formato Adobe PDF
728.44 kB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/385560
Citazioni
  • Scopus 0
  • ???jsp.display-item.citation.isi??? 0
Social impact