Agency Problems and Organizational Costs in Slave-Run Businesses

Abstract

In this paper we examine the internal economic organization of the peculium servi communis as separate business assets granted to a slave and its (external) relationships with creditors. Literary, legal and epigraphic evidence points predominantly to businesses of small or medium size, suggesting that there must have been some constraints to growth. We identify both agency problems arising within the business organization (governance problems) and agency problems arising between the business organization and its creditors (limited access to credit). We suggest that, although the praetorian remedies had a remarkable mitigating effect, agency problems operated as a constraint to the expansion of these business organizations, both in terms of individuals involved and in terms of capital invested.

Keywords: theory of the firm, limited liability, Roman law, slave

JEL Classification: K20, L22, L23, N83