Pedram Fardnia, Maher Kooli and Sonal Kumar
The purpose of the study is to examine the zero-leverage (ZL) phenomenon in family and non-family firms.
Abstract
Purpose
The purpose of the study is to examine the zero-leverage (ZL) phenomenon in family and non-family firms.
Design/methodology/approach
The authors consider three hypotheses and empirically test them using a sample of the largest US firms over the 2001–2016 period.
Findings
The authors find that, on average, 19.20% of family firms have zero debt vs 10.42% for non-family firms. The authors also find that family firms strategically choose to be ZL to maintain financial flexibility for future investments and exercise control over the decision-making process, consistent with the hypotheses of financial flexibility and control considerations. However, non-family firms are more likely to have zero debt if they have financial constraints and the credit market does not lend them money at affordable credit rates, consistent with the financial constraint hypothesis.
Originality/value
This paper contributes to different strands of literature. First, the authors contribute to the literature examining family firms' financial decisions. Second, the authors complement previous studies by exploring the reasons for the ZL behavior of family firms compared to non-family firms. The authors also examine the previously unexplored impact of ownership concentration on the ZL question.
Details
Keywords
Pedram Fardnia, Thomas Kaspereit, Thomas Walker and Sizhe Xu
This paper investigates whether financial factors, which are presumed to influence an airline's maintenance, purchasing, and training policies, are associated with the air…
Abstract
Purpose
This paper investigates whether financial factors, which are presumed to influence an airline's maintenance, purchasing, and training policies, are associated with the air carrier's safety performance.
Design/methodology/approach
In this paper, we employ a series of univariate and multivariate tests (OLS and Poisson regressions) to examine whether an airline's financial well-being as well as a country's legal and economic environment affect the airline's accident rate. Our study is the first to employ an international sample that covers 110 airlines in 26 countries over the period 1990–2009.
Findings
We document an inverse relationship between the profitability of air carriers and their accident propensity. Other financial variables such as liquidity, asset utilization, and financial leverage also appear to affect an airline's safety record, although these findings do not reach significance in all models. Flight equipment maintenance and overhaul expenditures are negatively related to accident rates. In addition, our results show that country-level variables related to the legal and economic environment have a significant effect on airline safety. Specifically, airlines in countries with strong law enforcement, more stringent regulatory systems, and better economic performance have superior safety performance. A series of robustness tests confirms our results.
Originality/value
The unique contributions of the study are (1) that it is the first to explore the drivers of safety performance in a cross-country context and (2) that it introduces a novel index of capacity when computing accident rates. By using data from 110 airlines in 26 countries, the study does not only provide insights into the firm-level but also the country-level determinants of an airline’s safety performance. The results of this research should be of interest both to academics and to regulators who develop, oversee, and implement policies targeted at improving aviation safety on a national and supranational level.