Authors:
Hinda Gmati, Imen Khanchel

Addresses:
1,2Department of Management, Tunis Higher School of Commerce, University of Manouba, Manouba, Tunisia.  hindgmati@live.fr1, imen.khanchel@esct.uma.tn2

Abstract:

The connection between family power, corporate opacity, and the cost of debt for a corporation is explored in this research article. Family control is linked to a reduced cost of debt, according to the research. This suggests that family involvement could be beneficial for financial stability and risk management. The study found that a lower cost of debt is associated with more corporate opacity, which is surprising. This surprising finding implies that being opaque can help companies avoid unwanted attention, which could lead to better loan terms. But there's no evidence that company opacity and family control combine to affect loan costs; the two variables seem to have independent effects. To further clarify the connection among debt costs, controlling families, and corporate opacity, the study also makes use of fuzzy-set qualitative comparative analysis (fsQCA). Lower levels of controlling families and higher degrees of corporate opacity are related with a higher cost of debt, according to the fsQCA data. Firms seeking to improve their financial strategy can benefit from this research's conclusions, which shed light on the intricate dynamics of corporate opacity, family control, and the cost of debt. 

Keywords: Family Control; Corporate Opacity; Fuzzy-Set Qualitative Comparative Analysis (fsQCA); S&P500; Cost of Debt; Financial Stability; Risk Management; Business Direction; Valuation and Profitability.

Received on: 05/08/2023, Revised on: 02/10/2023, Accepted on: 17/11/2023, Published on: 28/12/2023

FMDB Transactions on Sustainable Social Sciences Letters , 2023 Vol. 1 No. 4, Pages: 219-229

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