Board Connections and Debt Structure in Private Firms

We investigate the effect of board interlocks on family firms’ debt structure. Using a comprehensive panel data set from Italy, our empirical evidence indicates that interlocked directors facilitate family firms’ access to external debt, mostly in the form of trade debt. During episodes of liquidity dry-ups, board interlocks prove useful to withstand funding shortages and, in turn, to cope with the negative effects of the recession. These findings are consistent with the view that interlocked directors act as information and resource providers along the supply chain.