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ON THE RELATIONSHIP BETWEEN OWNERSHIP-CONTROL STRUCTURE AND DEBT FINANCING: NEW EVIDENCE FROM FRANCE
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Sabri Boubaker 
Abstract
The paper deals with external debt financing in controlling minority structures (CMSs), a very pervasive corporate organizational structure in France outside CAC 40 firms. Since large controlling shareholders in such firms maintain grip on control while owning only a small fraction of ownership rights, we are in a situation where their interests depart from that of the minority shareholders. Using a sample of 377 French firms, we show that firms featuring a substantial likelihood of expropriation (higher discrepancy between cash flow rights and control rights or group-affiliated), present lower leverage ratios than others due to debt supply restrictions. Contrariwise, the presence of second large controlling shareholder is perceived by external finance suppliers as a pledge against expropriation. Therefore, such firms exhibit high debt levels.
Keywords: Ownership Structure, Corporate Governance, Corporate Structure
How to cite this paper: Boubaker, S. (2007). On the relationship between ownership-control structure and debt financing: new evidence from France. Corporate Ownership & Control, 5(1), 139-154. https://doi.org/10.22495/cocv5i1p12
