Open Access

This paper-based dissertation deals with financial issues of family businesses. These businesses are mainly characterized by the overlapping of the two social systems: family and business. Thus, the involvement of an owner family can have a significant impact on corporate decision- making, for instance in terms of corporate finance decisions. In Germany, the latter is dominated by a strong orientation towards banks. Nevertheless, the relevance of external equity, as source of funding, has increased during the last years due to regulatory interventions (Basel III) and a growing number of alternative private equity providers. Against this backdrop, the present dissertation and its four papers examine different research questions in the context of capital structure decisions of family firms. These decisions are related to external equity as well as debt financing. The first paper is a structured literature review concerning the interaction of family firms and external equity investors. The paper analyzes the current state of knowledge and points out directions for future research, which is particularly relevant for a young and recently growing field of research. The second paper is a conceptual paper that deals with the differences of various types of private equity investors from the perspective of family firms looking for funding. The literature review paper revealed that existing studies so far neglected the topic of heterogeneity among investor types. Thus, the second paper represents a first attempt to close this research gap. Paper three also takes up a research gap identified by the first paper and examines the exit of private equity minority investments in family-owned businesses. The paper applies a qualitative empirical research design, which includes fourteen cases and related six interviews. The results reveal that the disinvestment phase of private equity investors only rarely leads to conflicts with owner families. The fourth paper uses a quantitative research design with a comprehensive dataset of 691 companies. The paper aims to compare the capital structures of large family and non-family firms. Overall, the findings show that family firms have significantly higher overall and long-term debt levels compared to their non-family counterparts. The identity as a family firm, which leads to a leap of faith by banks, can be a possible explanation for these results.