The Impact of Couple's Joint Holdings on Corporate Financial Distress

Abstract

Family firms are an important part of the national economy, and it is of interest whether a couple's Joint Holdings can leverage their strengths and reduce the risk of their firms falling into financial distress. This paper empirically examines the impact of joint shareholding by husband and wife on corporate financial distress, using a sample of A-share listed family firms from 2010-2021. We find that the effect of joint shareholding on financial distress is more pronounced in the sample with poorer quality audits and older firms, while the effect of joint shareholding on financial distress is significantly reduced in larger firms or those with higher gearing ratios. This paper has important implications for the role of joint shareholding in the capital markets as a means of escaping financial distress.