Shareholders' control rights, family-controlled ownership and the firms' leverage decisions

Research output: Contribution to journalArticle


We investigate the association between controlling shareholders' ownership (CS_Own) and firms’ leverage decisions in the Singaporean context. We examine whether the impact of ownership concentration on leverage differs across excess and lower control. We report that shareholders with excess control prefer leverage financing for an optimal capital structure and focus on value maximisation rather using leverage as a tool of minority shareholders’ expropriation. Our analysis shows that firms capital structure significantly influences by the coalition of blockholders particularly decisions about leverage financing in addition to the firms’ specific characteristics and institutional arrangements. Our empirical evidence shows that controlling shareholders with a lower fraction of equity are more concerned about limited holding thus prefer leverage over equity financing to inflate their equity stake to protect them from the potential takeovers and mergers. We report that capital structure decisions in Singapore are linked with the trade-off between the controlling shareholders’ target of mitigating firm risk and their non-dilution entrenchment needs. Further, we found an inverted U-shaped association between control ownership and leverage financing.
Original languageEnglish
Article number00225
Pages (from-to)(In-Press)
JournalInternational Review of Financial Analysis
Publication statusAccepted/In press - 11 Sep 2020

Fingerprint Dive into the research topics of 'Shareholders' control rights, family-controlled ownership and the firms' leverage decisions'. Together they form a unique fingerprint.

  • Cite this