Comparing the Agency Costs of Family and Non–Family Firms: Conceptual Issues and Exploratory Evidence

James J. Chrisman; Jess H. Chua; Reginald A. Litz

doi:10.1111/j.1540-6520.2004.00049.x

Comparing the Agency Costs of Family and Non–Family Firms: Conceptual Issues and Exploratory Evidence

James J. Chrisman¹; Jess H. Chua²; Reginald A. Litz³

¹ Mississippi State University, Haskayne School of Business at the University of Calgary. · ² Centre for Family Business Management and Entrepreneurship, Haskayne School of Business at the University of Calgary. · ³ I.H. Asper School of Business at the University of Manitoba.

Entrepreneurship Theory and Practice 2004

Family involvement in a business has the potential to both increase and decrease financial performance due to agency costs. In this article we discuss the different nature of agency costs in family firms and specify the combination of conditions necessary to determine the relative levels of agency costs in family and non–family firms through the impacts of agency cost control mechanisms on performance. We also present exploratory results based on a study of 1,141 small privately held U.S. family and non–family firms that suggest the overall agency problem in family firms could be less serious than that in non–family firms.

DOI: 10.1111/j.1540-6520.2004.00049.x
Volume: 28 (4)
Pages: 335-354
Language: en
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