The impact of family control on the top management compensation mix and incentive orientation

This study investigates the impact of the central agency problem on the top management compensation mix and incentive orientation in family-controlled firms. Our empirical evidence demonstrates that family-controlled firms offer a lower proportion of variable compensation to total compensation to their top management than non-family firms. Additionally, family-controlled firms with central agency problems provide their top management with higher proportions of cash compensation in their compensation packages than do family-controlled firms without central agency problems in non-electronic industries. This research provides new insights into how family-controlled firms utilize compensation mix and the temporal orientation of incentives to deal with agency problems.