Corporate opacity and cost of debt for family firms

Liangbo Ma, Shiguang Ma*, Gary Tian

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

42 Citations (Scopus)


This paper uses a sample of Chinese firms to examine the impact of corporate opacity on the relationship between family control and firms’ cost of debt. We find that family control is associated with a lower cost of debt on average, and a negative impact exists mainly in firms with relatively low corporate opacity. We further provide evidence that the moderating effect of corporate opacity becomes more pronounced when investors’ perception of controlling families’ moral hazard of expropriation is higher. Our results are robust to alternative opacity proxies and controlling for endogeneity of family control using the instrumental variable method. Our study highlights that controlling families are heterogeneous in their impact on the shareholder–debtholder relationship in family firms, and debtholders view corporate opacity as an important reference in assessing the extent of potential agency conflicts in China.

Original languageEnglish
Pages (from-to)27-59
Number of pages33
JournalEuropean Accounting Review
Issue number1
Early online date5 Oct 2015
Publication statusPublished - 2 Jan 2017
Externally publishedYes


Dive into the research topics of 'Corporate opacity and cost of debt for family firms'. Together they form a unique fingerprint.

Cite this