Preliminary communication
https://doi.org/10.10.18045/zbefri.2015.2.257
An investigation of the choice of governance modes in Chinese family firms
Jiancai Pi
orcid.org/0000-0003-4327-8355
; Department of Economics, School of Business, Nanjing University, 22 Hankou Road, Nanjing 210093, China
Abstract
This paper aims to investigate the choice of governance modes in Chinese family
firms. For that purpose, we build a principal-agent model to conduct our analyses.
There are two modes of governance that the owner of the family firm can choose
from, either the relational governance or the professional governance. The choice
of governance modes is embodied in managerial compensation under different
contractual arrangements. Our theoretical analyses show that under some
conditions it is optimal for the owner to choose the relational governance, while
under other conditions it is optimal for the owner to adopt the professional
governance. That is to say, the choice of governance modes is condition-dependent,
Keywords
Relational governance; professional governance; Chinese family firm; moral hazard
Hrčak ID:
149849
URI
Publication date:
21.12.2015.
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