Family Involvement, agency cost of debt financing, and small firm performance: research agenda

Abstract

The aim of this study is to examine the effects of family involvement in ownership and family involvement in management on agency costs of debt financing, as well on the performance of small family business. To achieve this objective, we reviewed the literature on family business, and drawing from agency theory we proposed a research model that highlights the links between the variables. Our paper makes contributions to the literature in three ways. Firstly, it helps to explain how dysfunctional behaviours may perpetuate small business constraints or even failure. Secondly, it advances the understanding of corporate governance mechanisms in small family business. And finally, it deepens the discussion of prior research, by advancing a set of propositions. We believe that a systematic comparison of different contexts provides new insights into small family business governance. Implications and directions for future research appear in the last section. [PUBLICATION ABSTRACT]