RETHINKING AGENCY THEORY IN COMPANIES WITH CONCENTRATED OWNERSHIP

Abstract

This article aims to provide a commentary on the need of alternative theories on corporate governance in companies with concentrated ownership with the aim to identify the gap in this field. The main argument of the article is that concentrated ownerhip gives rise to agency problems when a manager who has superior information acts on behalf of a group of shareholders and neglecting the others. Thus, this kind of agency conflicts require different solutions from conflicts that appear in dispersed ownership. Since the agency conflicts in concentrated ownership renders the assumption that concentrated ownership reduces agency conflicts ineffective, it is neccessary to employ alternative theories to better understand agency conflicts in these companies.