The Role of Family Ties in Mitigating Moral Hazard: Firm-Level Evidence from Tamil Nadu, India

Author

Goldie ChowFollow

Date of Graduation

Spring 5-1-2012

Document Type

Thesis

Degree Name

Master of Arts (MA)

Department/Program

Economics

First Advisor

Bruce Wydick

Abstract

Drawing on firm-level data from the district of Coimbatore in Tamil Nadu, India, this study explores the role of family ties as a means to counteract potential moral hazard concerns. It is shown that firms will be more likely to employ family relations when faced with a higher hidden context for moral hazard. Specifically, the analysis finds that the presence of family members within the firm is higher when the firm provides general training and that firms that are more likely to do external business with family relations when it is believed that the legal system is not effective. Additionally, the results suggest that there may be other factors that are equally or more influential in predicting a reliance on family relations, such as prior experience and profitability.

Recommended Citation

Chow, Goldie, "The Role of Family Ties in Mitigating Moral Hazard: Firm-Level Evidence from Tamil Nadu, India" (2012). Master's Theses. 28.
https://repository.usfca.edu/thes/28