Determinants of the type of indebtedness in Chile: the role of belonging to a business group or being a family business
Abstract
This paper explores the critical factors regarding the financing decision, which may be public or private, of Chilean companies that do not belong to the financial sector. The impact of controlling structures on Chilean companies is particularly examined, in the sense of whether a family group or a business group is involved. An unbalanced data panel of 92 companies listed on the Santiago Stock Exchange, included in the 2003-2013 period, was used to develop the research. The study concluded that companies that have a greater separation between voting rights and cash flows tend to have less exposure to public debt issues, as long as they do not have a family or business group behind them. In addition, it was found that belonging to family groups means that companies more frequently attend the issuance of public debt than when they only belong to a business group, given that the latter has access to an internal capital market and, moreover, it is not necessary to reveal sensitive information about their investment projects. The relevance of the results described above lies in the fact that the Chilean market is composed mainly of companies linked to family groups, which means that this greatly affects their capital and financing structure, and this can be decisive in the decision-making process for the different market players, both creditors and debt issuers.Keywords:
Familiar groups; Right to vote; Right of cash flow; Agency costs; Public debt; ConglomeratesReferences
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