Family ownership, management and capital structure decisions: Evidence from Morocco

Résumé

The purpose of this paper is to examine the effect of family involvement in ownership and management on debt policy of Moroccan listed firms adopting the socioemotional wealth (SEW) perspective. This study is conducted on a sample of Moroccan listed firms during the period from 2018 to 2022. The authors employed panel data analysis to investigate whether and how family involvement in ownership and management shapes firm’s capital structure. Findings suggest that family ownership plays a key role in shaping a firm’s capital structure insofar as it leads to higher levels of indebtedness. Nevertheless, having a family CEO does not significantly influence debt financing. This implies that family shareholders may indirectly influence decision-making through ownership, using their voting rights. Indeed, findings support assumptions of the socioemotional wealth theory (SEW) and suggest that family firms determine their capital structure by considering a combination of economic and non-economic factors, especially those related to control preservation. Additionally, findings show that the financing behavior of Moroccan listed firms aligns with the pecking order theory’s assumptions. This study makes a novel contribution by examining the influence of family involvement on debt financing within the underexplored context of an emerging Arab African economy, thereby addressing a critical gap in the literature, which remains largely focused on developed markets. It also responds to recent scholarly calls for a more nuanced analysis of family firms’ financing behavior through the lens of behavioral approaches. By drawing on the socioemotional wealth (SEW) perspective, this study offers new insights into the capital structure dynamics of family firms. The findings contribute to a deeper understanding of the financing behavior of family-controlled businesses, offering valuable implications for researchers, investors, and policymakers in comparable institutional contexts.