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What is Optimal Capital Structure in Family Firms about?
This document presents a theory on the optimal capital structure and dividend policy for family business groups. It argues that family groups may establish new subsidiaries through either a pyramidal structure or horizontal structure. A pyramidal structure generates more internal capital but limits family control of subsidiaries. As a result, large, less profitable firms emerge as pyramidal subsidiaries that are less leveraged than standalone firms. The theory also predicts that parent firms in a pyramid wi
- Author
- Raj Singh
- Language
- EN