How does clan culture affect agency costs? Empirical evidence from private listed companies in China
Minglin Wang, Mengna Xu, Jiahua Zhao, Si Tan, Zhiyong Dai
Keywords:
Clan Culture; Private Enterprise, Agency Cost, Collective Punishment, Moral Constraint
Abstract:
Clan culture has had the most extensive and profound impact on Chinese socio-economic activities. This article constructs a theoretical model for analysing the impact of clan culture on agency costs from the perspective of evolutionary game theory. The clan culture, as a ‘shared belief’, leads to an equilibrium of historical repeated game between managers and shareholders in which behavioural combination of (honesty, renewal of employment) occurs. Under this equilibrium, the agency problem between managers and shareholders is constrained. This article takes Chinese listed private enterprises as samples to empirically analyse the impact of clan culture on agency costs between owners and managers, and verify theoretical hypotheses. The empirical results indicate that clan culture reduces agency costs between owners and managers. The impact of clan culture on agency costs is mainly achieved through the internal moral constraints of managers rather than external collective punishment mechanism. Further research suggests that there is a substitutional relationship between the impact of clan culture on owner manager agency costs and the influence of formal institutions, as well as the level of marketization. This study is a supplement to the research on corporate governance of private enterprises from the perspective of traditional culture. It provides a new perspective for understanding the evolution of corporate governance in emerging markets represented by China and how to enhance the competitiveness of enterprises with local characteristics.
Fulltext download:
 How does clan culture affect agency costs? Empirical evidence from private listed companies in China [PDF file] [Filesize: 1.1 MB]
 10.7441/joc.2025.04.15
Wang, M., Xu, M., Zhao, J., Tan, S., & Dai, Z. (2025). How does clan culture affect agency costs? Empirical evidence from private listed companies in China. Journal of Competitiveness, 17(4), 402-432. https://doi.org/10.7441/joc.2025.04.15
|
