The Nexus between Financing as Capital Structure and Economic Value Added in Family Business

Derbali A and Mani Y

Published on: 2019-08-05

Abstract

This paper investigates empirically the relationship between financing as capital structure and economic value added by using correlation and regression analysis. Authors use a sample composed by nine Moroccan family businesses through the period from 2005 to 2016. The empirical findings find that there isn’t significant correlation between external financing and EVA performance scales. The empirical results find that there is no significant correlation between external financing and economic value added in the case of Moroccan family firms. The empirical results provide important implications for company’s politics and practices in changing the capital structure of the family firms. Manager’s performance is influenced in relation to earnings management on family firm’s performance. This study contributes to the family business literature by using correlation and regression approach to examine the relationship between financing as capital structure and economic value added.