Family Capitalism Corporate Governance Theory

Jellal, Mohamed (2009): Family Capitalism Corporate Governance Theory.

Abstract

Family firms, which are prevalent around the world both for small organizations and large corporations, are usually more performant than other types of firms. This paper draws on altruism and on the theory of incentives contracting to explain why family firms perform better. Assuming that altruism only exists in family firms, we show that the strength of family ties has an impact on the optimal contract only under asymmetric information. Then, we extend the analysis to the principal-agent supervisor setting and prove that the recruitment of family members may be seen as a device against collusion within a three-tier hierarchy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Family Capitalism; Altruism; Family Ties ;Asymmetric Information;Supervisor Agent Principal; Collusion
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D86 - Economics of Contract: Theory; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology; D - Microeconomics > D6 - Welfare Economics > D64 - Altruism ; Philanthropy; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design

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