Family Management Control and Trade Credit Utilization: The Influence of Financial Constraints and Supplier Monitoring

We examine how family management control affects trade credit utilization. We find that firms with family management control use significantly lower trade credit, reflecting both lower financial constraints and a stronger preference to preserve control. More importantly, we show that the effect varies across family firms, becoming stronger with deeper family involvement and under first-generation control. We also note that institutional ownership and competitive environment encourage greater trade credit utilization, whereas independent directors and nonfamily Chief Executive Officers (CEOs) exert limited influence. Overall, our findings indicate that substantive family control matters more than formal governance structures in shaping family firms’ short-term financing decisions.