Closely Held Family Business Agency Costs Between Owners

The relationship between principal-principal (PP) agency cost (AC) and corporate governance (CG) is analysed in this paper. A dynamic modelling framework, which controls for potential endogeneity, is used to investigate 120 family firms and 90 non family firms from 2006-2014. The results indicate that traditional corporate governance mechanisms cannot mitigate PP agency conflict in family firms in emerging markets. There is strong evidence supporting a need for promulgating and streamlining of corporate laws, in emerging markets, to reduce the possibility of expropriation of minority shareholders by owners of politically powered family firms.