Capital structure in blockholder-dominated firms: a closer look on corporate ownership and control

Abstract

In countries where holding control takes on much relevance it is arguable that capital structure choices are shaped in response to ownership characteristics. These issues are explored in the Italian context being dominated by pyramidal groups and majority-controlled firms. The results show that (1) family firms are more indebted than non-family counterparts and, within family firms, (2) founding-family controlled ones are more reliant on debt; (3) family firms exploit control-enhancing devices along with long-term leverage; (4) higher cash flow rights are associated with a lower leverage; (5) institutional investors are more common in firms with a higher dependence on long-term debt; (6) decreasing trends of the long-term leverage over time seem to occur with upward paths of the votes-to-capital ratio