Agency problems and organizational costs in slave-run businesses

We examine the economic organization of slave-run businesses: slaves endowed with certain assets (the peculium). The 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 finance). We show 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.