Small Family Businesses: Innovation, Risk and Value

Samir Harith and Ruth Helen Samujh
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Samir Harith: School of Accounting, Finance and Economics, University of Waikato, Hamilton 3216, New Zealand
Ruth Helen Samujh: Capric Enterprises (NZ) Ltd., Hamilton 3204, New Zealand

JRFM, 2020, vol. 13, issue 10, 1-15

Abstract: This article reviews the literature and applies principal-to-principal (PP) conflict theory to small family based businesses. The lack of accurate measurement and communication of risk leading to issues with innovation, is the primary cause of PP agency costs. Careful analysis of the risk levels reflected in the cost of debt and opportunity cost of equity provides a theoretically robust and empirically estimable process for ascertaining the true PP agency cost. Awareness of the constraining governance structures and the suggested method, based on the cost of capital, to assess small business risk can assist SME owners and financiers to SMEs to promote business efficiency and innovation.

Keywords: family business; principal–principal agency conflict; governance; risk; cost of equity (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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