Family control, financial flexibility and crisis response in French listed firms

Family-controlled firms are often described as financially conservative, yet they also appear reluctant to issue equity when external finance becomes necessary. The study examines whether these patterns can be understood through a common governance mechanism: family control changes the relative costs of dilution and financial distress. Capital-structure choices in family firms are therefore treated not only as responses to taxes, information frictions, or valuation windows, but also as governance decisions tied to continuity, authority, and organisational autonomy. Five expectations follow from this argument: lower leverage, slower leverage adjustment, stronger debt use when financing deficits emerge, a weaker market-timing imprint, and a stronger move to preserve financial flexibility during systemic shock. These expectations are evaluated in an unbalanced panel of French listed non-financial firms over 2000–2024, using fixed-effects models, dynamic panel estimators, and crisis-period analyses centred on COVID-19. Across the core specifications, family-controlled firms hold less leverage on average, adjust more slowly, finance a larger share of deficits with debt, display a weaker long-run market-timing imprint, and delever relative to comparable non-family firms during COVID-19. The evidence is consistent with the view that capital structure in family firms operates as a governance mechanism through which organisations protect discretion in normal times and preserve response capacity under systemic stress.