open access publication

Article, 2024

Foundation ownership and creditor governance: Evidence from publicly listed companies

Journal of International Financial Markets Institutions and Money, ISSN 1873-0612, 1042-4431, Volume 93, Page 101982, 10.1016/j.intfin.2024.101982

Contributors

Buchanan, Bonnie G 0000-0002-6970-9742 (Corresponding author) [1] Kaya, Caglar [2] [3]

Affiliations

  1. [1] University of Surrey
    2. [NORA names: United Kingdom; Europe, Non-EU; OECD];
  2. [2] Aalborg University
    3. [NORA names: AAU Aalborg University; University; Denmark; Europe, EU; Nordic; OECD];
  3. [3] University of Gothenburg
    4. [NORA names: Sweden; Europe, EU; Nordic; OECD]

Abstract

Foundation ownership represents an alternative corporate governance model to many conventional ownership structures. We examine the effect of foundation ownership on creditor governance. By utilizing an international sample of 411 publicly listed companies between 2003 and 2021, we document that foundation ownership leads to lower credit risk. This negative effect is robust across several different credit measures. Foundation-controlled companies also fare better than family-controlled and institutional investor-controlled companies. Specifically, foundation-controlled companies have better access to bank loans, with more favorable loan contracting conditions. Our results are supported by a series of robustness tests. The results also have policy implications as the European Commission recommends companies move away from a short-term focus.

Keywords

Commission, European, European Commission, bank loans, banks, companies, conditions, contractive condition, corporate governance model, credit, credit measures, credit risk, creditor governments, creditors, effect, evidence, family-controlled, focus, foundations, governance model, government, implications, international sample, loans, measurements, model, negative effects, ownership, ownership structure, policy, policy implications, results, risk, robustness, robustness tests, samples, short-term focus, structure, test

Funders

  • Novo Nordisk Foundation

Data Provider: Digital Science

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