1 Introduction
2 Theoretical background
2.1 Capital structure theories in family firms
2.2 The role of the behavioral agency model and loss aversion in capital structures
3 Hypotheses development
3.1 The impact of SFOs versus PE firms on capital structure
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Hypothesis 1 (H1): Single family offices raise less debt when financing direct entrepreneurial investments than PE firms.
3.2 The moderating effect of entrepreneurial family idiosyncrasies on investment decisions
3.2.1 The moderating effect of owner management
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Hypothesis 2 (H2): The relationship between the type of investor and the likelihood of debt financing for direct entrepreneurial investments is moderated by owner management. Specifically, single family offices, in contrast with PE firms, have even less debt when the percentage of shareholders on the management board increases.
3.2.2 The moderating effect of firm age
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Hypothesis 3 (H3): The relationship between the type of investor and the likelihood of debt financing for direct entrepreneurial investments is moderated by firm age. Specifically, single family offices, in contrast with PE firms, have even less debt when firm age increases.
3.2.3 The moderating effect of the importance of SEW
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Hypothesis 4 (H4): The relationship between the type of investor and the likelihood of debt financing for direct entrepreneurial investments is moderated by the importance of SEW. Specifically, single family offices, in contrast with PE firms, have even less debt when the importance of SEW increases.
4 Methodology
4.1 Sample and data collection
4.1.1 Phase 1: Search process and semistructured interviews with SFOs
4.1.2 Phase 2: Search process and semistructured interviews with PE firms
4.1.3 Phase 3: Quantitative database research
4.2 Common method bias
4.3 Measures
4.3.1 Dependent variable: Debt financing
4.3.2 Independent variable: Type of investor
4.3.3 Moderating variables
5 Empirical results
5.1 Descriptive statistics
Variables | Mean | S.D. | 1. | 2. | 3. | 4. | 5. | 6. | 7. | 8. | |
---|---|---|---|---|---|---|---|---|---|---|---|
1. | Debt financing | 2.317 | 1.036 | 1.000 | |||||||
2. | Firm size | 20.861 | 41.880 | .179† | 1.000 | ||||||
3. | Club deal investments | .433 | .498 | .127 | .107 | 1.000 | |||||
4. | Current holdings | 12.238 | 17.797 | − .046 | .127 | .036 | 1.000 | ||||
5. | Owner management | 64.510 | 41.225 | − .182† | − .264** | −.096 | −.227* | 1.000 | |||
6. | Firm age | 17.375 | 11.213 | .225* | .253** | − .054 | .086 | − .195* | 1.000 | ||
7. | SEWi | 3.841 | .550 | .012 | − .128 | − .014 | .110 | .040 | − .033 | 1.000 | |
8. | Type of investor | .481 | .502 | − .427*** | − .223* | .014 | .034 | .028 | − .015 | .225* | 1.000 |
Variance inflation factor | 1.28 | 1.85 | 1.03 | 1.19 | 1.23 | 1.30 | 1.11 | 1.27 |
All firms (N = 104) | SFO status (N = 50) | PE status (N = 54) | Mean diff | t | df | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mean | Min | Max | S.D. | Mean | Min | Max | S.D. | Mean | Min | Max | S.D. | |||||
1. | Debt financing | 2.317 | 1.000 | 4.000 | 1.036 | 1.860 | 1.000 | 4.000 | .990 | 2.741 | 1.000 | 4.000 | .894 | − .881 | − 4.767*** | 102 |
2. | Firm size | 20.861 | 1.000 | 400.000 | 41.880 | 11.200 | 1.000 | 65.000 | 10.870 | 29.806 | 2.000 | 400.000 | 55.950 | − 18.606 | − 2.311* | 102 |
3. | Club deal investments | .433 | .000 | 1.000 | .498 | .440 | .000 | 1.000 | .501 | .426 | .000 | 1.000 | .499 | .014 | .143 | 102 |
4. | Current holdings | 12.238 | 1.000 | 160.000 | 17.797 | 12.860 | 1.000 | 160.000 | 22.964 | 11.661 | 1.000 | 55.000 | 11.283 | 1.199 | .342 | 102 |
5. | Owner management | 64.510 | .000 | 100.000 | 41.225 | 65.720 | .000 | 100.000 | 38.585 | 63.389 | .000 | 100.000 | 43.861 | 2.331 | .287 | 102 |
6. | Firm age | 17.375 | 2.000 | 59.000 | 11.213 | 17.200 | 2.000 | 44.000 | 9.727 | 17.537 | 4.000 | 59.000 | 12.523 | − .337 | − .152 | 102 |
7. | SEWi | 3.841 | 2.429 | 5.000 | .550 | 3.969 | 2.429 | 5.000 | .610 | 3.722 | 2.429 | 4.714 | .462 | .246 | 2.331* | 102 |
8. | Type of investor | .481 | .000 | 1.000 | .502 | 1.000 | 1.000 | 1.000 | .000 | .000 | .000 | .000 | .000 | 1.000 |
5.2 Regression results
Debt financinga | ||||||
---|---|---|---|---|---|---|
Model 1 | Model 2 | Model 3 | ||||
Control variables | ||||||
Firm size (ln) | .626** | (.205) | .070 | (.278) | .099 | (.289) |
Club deal investments | .497 | (.382) | .566 | (.404) | .629 | (.420) |
Current holdings | − .018 | (.014) | − .012 | (.014) | − .020 | (.014) |
Moderators | ||||||
Owner management | −.008 | (.005) | .002 | (.007) | ||
Firm age | .039† | (.020) | .072** | (.027) | ||
SEWi | .652 | (.401) | .101 | (.618) | ||
Independent variable | ||||||
Type of investor | −1.966*** | (.483) | −2.874 | (3.304) | ||
Interaction terms | ||||||
Type of investor × owner management | − .022* | (.010) | ||||
Type of investor × firm age | − .088* | (.040) | ||||
Type of investor × SEWi | .982 | (.831) | ||||
Log-likelihood | − 114.350 | − 103.658 | − 99.130 | |||
Pseudo-R2 | .049 | .138 | .175 | |||
Observations | 104 | 104 | 104 |
5.3 Robustness analysis
5.3.1 Proportional odds
5.3.2 Binary logit regression
Debt financingb | ||||||
---|---|---|---|---|---|---|
Model 1 | Model 2 | Model 3 | ||||
Control variables | ||||||
Firm size (ln) | .764* | (.271) | .001 | (.366) | − .105 | (.449) |
Club deal investments | .877† | (.468) | 1.148* | (.546) | 1.351* | (.615) |
Current holdings | − .033 | (.023) | − .029 | (.028) | − .037 | (.031) |
Moderators | ||||||
Owner management | − .015† | (.008) | − .004 | (.013) | ||
Firm age | .066* | (.033) | .441* | (.172) | ||
SEWi | .524 | (.485) | .037 | (.902) | ||
Independent variable | ||||||
Type of investor | − 2.431*** | (.630) | .336 | (4.665) | ||
Interaction terms | ||||||
Type of investor × owner management | − .034* | (.016) | ||||
Type of investor × firm age | − .431* | (.172) | ||||
Type of investor × SEWi | 1.016 | (1.105) | ||||
Constant | − 1.067† | (.624) | − .140 | (2.270) | − 2.900 | (3.934) |
Log-likelihood | − 59.628 | − 47.890 | − 38.201 | |||
Pseudo-R2 | .102 | .279 | .425 | |||
Observations | 104 | 104 | 104 |