Family Firms and the Agency Cost of Debt: The role of soft information during a crisis

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Show simple item record D’AURIZIO, Leandro OLIVIERO, Tommaso ROMANO, Livio 2012-10-09T08:15:29Z 2012-10-09T08:15:29Z 2012
dc.identifier.issn 1725-6704
dc.description.abstract In this paper we study how access to bank lending during the recent financial crisis differed between family and non-family firms. Our theoretical prediction is that the presence of a family block-holder in the company attenuated the agency conflict in the borrower-lender relation, because of the higher non-monetary cost of default entailed in this type of corporate ownership structure. Because this information is to a large extent soft, we further investigate the interaction between the family firm status and the screening technology adopted by banks. Using highly detailed data referred to Italy, we exploit the change in the credit allocation following Lehman Brothers’ bankruptcy. We find that family firms experienced a contraction in granted credit lower than non-family firms. Results are robust to ex-ante differences between the two types of firms and to bank-specific shocks. In line with our prior, banks that increased the role of soft information in their lending practices reallocated credit towards family firms. en
dc.format.mimetype application/pdf
dc.language.iso en en
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2012/22 en
dc.rights info:eu-repo/semantics/openAccess
dc.subject Family Firms en
dc.subject Financial crisis en
dc.subject Relationship lending en
dc.subject Soft information en
dc.subject Credit supply en
dc.subject C81 en
dc.subject D22 en
dc.subject E44 en
dc.subject G21 en
dc.subject G32 en
dc.title Family Firms and the Agency Cost of Debt: The role of soft information during a crisis en
dc.type Working Paper en
dc.neeo.contributor D’AURIZIO|Leandro|aut|
dc.neeo.contributor OLIVIERO|Tommaso|aut|
dc.neeo.contributor ROMANO|Livio|aut|
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