Agency costs in family firms: state of the art and future directions for emerging countries

Purpose This paper analyzes the dynamics of agency costs in family firms through a systematic literature review, focusing on the interplay of governance mechanisms, institutional contexts and socioemotional wealth. Design/methodology/approach A systematic literature review of 91 articles published between 2010 and 2024 was made. The data was sourced from the Web of Science and Scopus databases using a search strategy emphasizing agency theory, family enterprises and emerging economies. Quantitative analysis identified key themes, influential authors and emerging trends, while qualitative synthesis provided deeper insights into governance practices and agency dynamics. Findings The study highlights the dual nature of family ownership as both a stabilizing force and a source of agency conflicts. While concentrated ownership aligns family and firm interests, it can lead to principal-principal conflicts, such as earnings management and minority shareholder expropriation, particularly in weak institutional contexts. Governance mechanisms, including board independence, external directors and professional management, are critical for mitigating agency costs but are often constrained by socioemotional wealth considerations. Originality/value The findings underscore the pivotal role of institutional environments in shaping governance practices and the performance of family firms. The study offers actionable insights for family business leaders, policymakers and practitioners.