Family Control and Debt When Dual-Class Shares Are Restricted: The Case of Poland

Tomasz Jewartowski , Michał Kałdoński


Our research, based on an unbalanced panel of 105 companies listed on the Warsaw Stock Exchange during 2006–10, demonstrates that public family firms are, on average, more levered than nonfamily firms and more extensively use control-enhancing mechanisms (CEMs), resulting in a wedge between control (voting) rights and cash flow rights. We decompose the total wedge for family firms into a standard dual-class shares component and a disproportionate board representation component finding inverse relations between each of them and the debt levels (positive for the former and negative for the latter). When dual-class shares are restricted—as in the case of Polish companies once they become public—financial decisions may be driven by control motivations. Family firms have strong incentives to use debt as a nondiluting security.
Author Tomasz Jewartowski (WZ / KFP)
Tomasz Jewartowski,,
- Department of Corporate Finance
, Michał Kałdoński (WZ / KFP)
Michał Kałdoński,,
- Department of Corporate Finance
Journal seriesEmerging Markets Finance and Trade, ISSN 1540-496X, (A 25 pkt)
Issue year2015
Publication size in sheets0.65
Keywords in Englishcorporate control, corporate diversification, debt, dual-class shares, family firms
ASJC Classification2000 General Economics, Econometrics and Finance; 2003 Finance
Languageen angielski
Score (nominal)25
Score sourcejournalList
ScoreMinisterial score = 0.0, 23-12-2019, ArticleFromJournal
Ministerial score (2013-2016) = 25.0, 23-12-2019, ArticleFromJournal
Publication indicators WoS Citations = 1; Scopus SNIP (Source Normalised Impact per Paper): 2015 = 0.74; WoS Impact Factor: 2015 = 0.768 (2) - 2015=0.792 (5)
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Tytuł numeruSymposium: Productivity, Trade, and Development in Latin America
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