infonet-economy

The present text examines how the organizational input variable "family" and the financial output variable "return" are interrelated. This question is crucial since there are serious doubts brought forward by Schulze et al. (2003) whether family firms really exhibit the ideal precondition of low agency costs as hypothesized by Fama and Jensen (1983a and 1983b). Schulze et al. (2003) find that family firms suffer from costly agency conflicts induced by altruism between family principals (e.g. parents) and family agents (e.g. children). Hence there is a need for research that examines the question whether family influence on a firm is boosting or hampering the financial performance.