Family involvement, auditing and small business debt financing: evidence from the U.S.
Loading...
Date
2015-01-16
Authors
Zhang, Lei
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Small- and medium-sized enterprises (SMEs) play an important role in modern business
society but still face difficulties in debt financing. Literatures suggest that family involvement
and external auditing can assist small firms to mitigate agency problems that impede the access
to loans, and the liability of newness could be a factor in small business debt financing. Our
research examines how family involvement affects cost of debt upon the different choices on
external auditing, and how the liability of newness works. We find when engaging external
auditing, family involvement is not a significant influencer in reducing the cost of debt for small
businesses. Besides, when the external auditing is not engaged, family involvement becomes a
significant influencer. We also find that when external auditing is not engaged, family
involvement works in reducing the cost of debt only when the liability of newness is a factor.
Description
Keywords
family involvement, external auditing, small business, debt financing