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Corporate opacity and cost of debt for family firms

Ma, Liangbo, Ma, Shiguang and Tian, Gary 2015, Corporate opacity and cost of debt for family firms, European accounting review, vol. In press, pp. 1-34, doi: 10.1080/09638180.2015.1087868.

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Title Corporate opacity and cost of debt for family firms
Author(s) Ma, Liangbo
Ma, Shiguang
Tian, Gary
Journal name European accounting review
Volume number In press
Start page 1
End page 34
Total pages 34
Publisher Taylor & Francis
Place of publication Abingdon, Eng.
Publication date 2015-10
ISSN 0963-8180
Summary This paper uses a sample of Chinese firms to examine the impact of corporate opacity on the relationship between family control and firms’ cost of debt. We find that family control is associated with a lower cost of debt on average, and a negative impact exists mainly in firms with relatively low corporate opacity. We further provide evidence that the moderating effect of corporate opacity becomes more pronounced when investors’ perception of controlling families’ moral hazard of expropriation is higher. Our results are robust to alternative opacity proxies and controlling for endogeneity of family control using the instrumental variable method. Our study highlights that controlling families are heterogeneous in their impact on the shareholder–debtholder relationship in family firms, and debtholders view corporate opacity as an important reference in assessing the extent of potential agency conflicts in China.
Language eng
DOI 10.1080/09638180.2015.1087868
Field of Research 150201 Finance
1501 Accounting, Auditing And Accountability
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2015, European Accounting Association
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Document type: Journal Article
Collections: School of Architecture and Built Environment
Department of Finance
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Created: Fri, 27 Nov 2015, 13:55:51 EST

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