Family Management and Corporate Bond Spreads: Do Foreign and Government Ownerships Matter?

This research hand-collects data on family CEOs of family-controlled firms (named family management) to investigate the relation between family management and corporate bond spreads in Taiwan with a sample of 1,660 firms for the period 1996–2015. We show new evidence on the impact of financial constraints and CEOs’ characteristics on corporate bond spreads. Results find an impact of family management on increasing corporate bond spreads after considering firms’ and bonds’ characteristics. Moreover, the effect of family management on higher bond spreads is offset by firms under foreign or government ownership, as interacting family management with such ownership effect would give outside investors more assurance and protect minority shareholders from exploitation. Finally, firms’ financial constraints and CEOs’ weak characteristics lead to a detrimental impact of family management on bond spreads.