Article,
Foundation ownership and creditor governance: Evidence from publicly listed companies
Affiliations
- [1] Univ Surrey, Surrey Business Sch, Dept Finance & Accounting, Guildford GU2 7XH, Surrey, England [NORA names: United Kingdom; Europe, Non-EU; OECD];
- [2] Aalborg Univ, Fac Social Sci & Humanities, Business Sch, Aalborg, Denmark [NORA names: AAU Aalborg University; University; Denmark; Europe, EU; Nordic; OECD];
- [3] Copenhagen Business Sch, Ctr Corp Governance, Dept Accounting, Frederiksberg, Denmark [NORA names: CBS Copenhagen Business School; University; Denmark; Europe, EU; Nordic; OECD];
- [4] Univ Goteborg, Dept Business Adm, Gothenburg, Sweden [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, foundationcontrolled 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.
