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Family Capitalism Corporate Governance Theory

  • Jellal, Mohamed

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.

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File URL: http://mpra.ub.uni-muenchen.de/17886/1/MPRA_paper_17886.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17886.

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Date of creation: 15 Oct 2009
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Handle: RePEc:pra:mprapa:17886
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