The Relationship of Agency and Performance in Family

The purpose of this research is to determine the effect and the relationship between controlling mechanism variables and family business performance. This research uses 20 small and medium size family businesses in Yogyakarta as the sample. The controlling mechanism variables used as the independent variables are insider ownership, debt policy, and dividend policy. The other independent variable that is not included as the controlling mechanism is business size, operating profit, and business risk. The dependent variable used in this research is the business performance which is proxy by Tobin’s Q. The multiple regressions used to test the effect of independent variable toward the dependent variables simultaneously and individually. The result of this research can explain the insider ownership, debt policy, and dividend policy which significantly affect business performance in simultaneously and individually. This research also found that business performance has positive relationship with those three variables