Agency Cost

The objective of this study was to verify the influence of the structure of ownership and family management in the cost of debt financing of publicly traded companies listed in B3. For this, a descriptive, quantitative research was carried out by means of documentary analysis, with consultation to Reference Forms, Economatica database and B3 website. The sample was composed of 211 companies in 2012, 214 in 2013, 225 in 2014, 220 in 2015 and 223 in 2016. The results showed that the average cost of debt financing, in most years, was not lower in the group of companies that had a family-owned structure. However, when comparing the cost of debt financing between companies that had family and non-family management, it was noticed that, in most years, the cost was lower in the group of family-run companies. Therefore, it was found that only the family management influenced to reduce the cost of debt financing. It is concluded that companies with ownership structure and family management e...

Corporate bonds have been one of the major sources of medium and long-term financing in Brazil. We analyze how corporate bond covenants have been used to mitigated agency costs between shareholders and bondholders. Our data includes 119 corporate bond indentures issued from 1998 to 2001 and 141 issued from 2002 to 2005 in Brazil. This paper analyzes whether public investors have demanded stricter terms in corporate bond indentures. When comparing to previous studies of Anderson (1999) and of Filgueira and Leal (2001), we found empirical evidence that: more bond issues with no indexed inflation features, but more floating rate interest features to match market needs; no major changes for contingent maturity features; loose covenants with respect to dividend and financing actions; and tighter covenants regarding change in control and/or ownership and negative pledge. There is empirical evidence that the role of sponsor may partially mitigate risks borne by bondholders.

Our analysis of more than 1,000 Chinese listed firms, 2003-2005, reveals a positive association between state ownership (SO) and firm performance. Arguably, if SO ''causes'' performance, it must be through the channel of agency cost. Therefore, our paper checks the robustness of this positive SO/performance finding by analyzing the role of agency cost as a mediator. It emerges that SO in the Chinese context may represent a strategic asset rather than an agency burden. However, it is not clear whether this is an outcome driven by efficiency or power.

When looking at the Global economy and the quantification of the operative risk in the cost of capital, a necessary ingredient for a meaningful analysis is an assessment of the country`s integration into world capital markets. The international financial markets are progressively becoming one huge, integrated, global capital market, that is contributing to higher stock prices in developed as well as developing economies. If for example a market is segmented from the rest of the world, its exposure with a common world factor may have little or no ability to explain its expected return. Large companies visible enough to attract global investors, have a lower cost of capital and a greater equity value for two main reasons: first, because the risks of equity are shared among more investors with different portfolio exposures and hence a different “appetite†for bearing certain risks, equity market risk premiums should fall for all companies in countries with access to global markets. ...

PurposeThe purpose of this study is to examine the agency problem of expropriation using dividends in politically connected firms and the relevance of institutional investors in limiting this problem. The growing presence of this group of shareholders offers a unique opportunity to test their importance in the context of dividends payments and expropriation.Design/methodology/approachThis study uses the Tobit regression to test the association between political connection, institutional investors and dividend payouts. The results are also robust to the three-stage-least squares regressions method.FindingsThe study is based on a random sample of 2,458 Malaysian firms-year observations for the period of 2004-2009. The results reveal that politically connected firms have an inclination to pay lower dividends, while institutional ownership is associated with higher dividend payouts. Furthermore, the findings reveal that higher levels of institutional ownership moderates the negative rel...

This paper integrates a model of agency cost with time varying uncertainty into an otherwise standard Dynamic New Keynesian model in order to capture a "credit-uncertainty cycle" in the model economy. Deterioration in credit conditions ampli…es the aggregate uncertainty of the economy; rising uncertainty further aggravates the information asymmetry between lenders and borrowers, worsens credit conditions and eventually cause more damage than the initial shock. In our model, uncertainty emerges from the volatility in the idiosyncratic productivity of an economic agent (micro uncertainty) as well as in the total factor productivity (macro uncertainty). We describe the time-variant micro and macro uncertainty using stochastic volatility models. In order to obtain independent e¤ects of an uncertainty shock to the economy without interacting with other shocks, we solve our model based on a third-order approximation using perturbation method. We estimate our model using Bayesian Markov Chain Monte Carlo (MCMC) methods to identify the credit, uncertainty as well as the other economic shocks and obtain the steady state parameters of the model economy.

This paper aims to analyse the bi-directional relationship between technical efficiency, as a measure of companies' performance, and capital structure, under the agency cost theory as well as the pecking order and trade-off theory, to explain the capital structure decisions. The technical efficiency was estimated by the DEA method and corrected by using a suitable bootstrap to obtain statistical inferences. To test the agency cost hypothesis, asymmetric information hypothesis, risk-efficiency hypothesis and franchise value hypothesis (under pecking order and trade off theories framework), two models were applied using some determinants of capital structure such as size, profitability, tangibility, liquidity as control and explanatory variables through a truncated regression with bootstrapping. From an initial sample of 1024 small and medium sized companies from the interior of Portugal, for the period 2006-2009, a subsample of 210 SMEs from secondary and tertiary sectors was selected. The results suggest that medium sized companies have higher average bias-corrected efficiency than small companies; that short-term leverage is UNIAG-

The rapid growth of Indonesia's economy has led to the emergence of numerous new businesses. This influx of new companies has intensified competition across various industries. To thrive in an increasingly competitive environment, companies must establish clear objectives. According to Ningsih (2021) business development can be assessed through the capital invested by investors. Companies with strong performance are more likely to gain investor trust. Investors prioritize corporate performance as it aligns with the returns generated from their investments. In terms of financial performance at a corporate level, there have been several cases of financial deterioration. In a specific case, Suryahadi (2023) in a report at kontan.co.id stated that PT Adaro Energy Indonesia Tbk (ADRO) experienced a downturn in its performance in the first six months of 2023. In its first six months, ADRO earned a net profit attributable to owners of the parent entity worth USD 873.83 million, representing a 27.9% drop when compared with a similar period in a preceding year, when its net profit totaled USD 1.21 billion. This decline was generated by a reduction in the average selling price and the impact of rising royalty fees on coal mining companies. A substantial portion of past studies have examined financial performance in companies. In Indonesia, studies have been conducted,

The transition toward renewable energy in emerging economies requires innovative financing instruments that can bridge investment gaps while ensuring sustainability. Among such instruments, green bonds have gained prominence as a critical mechanism to mobilize private and institutional capital for climate-related projects. However, the expansion of green bond markets in emerging regions such as Africa and Asia has faced structural and institutional constraints. This review article investigates the role of policy innovation in accelerating green bond markets for renewable energy, focusing on evidence from emerging economies. By systematically integrating insights from more than 80 academic and policy sources, the paper provides a comprehensive framework that links policy innovation, institutional capacity, market maturity, and renewable energy financing to the expansion of green bond issuance.

The study adopts a multi-method empirical synthesis, including descriptive statistics, correlation analysis, fixed effects regression, feasible generalized least squares (FGLS), and dynamic panel two-step system generalized method of moments (GMM). These approaches are complemented with robustness checks, sensitivity analyses, and sub-sample evaluations covering the 2007–2008 global financial crisis and the COVID-19 pandemic (2020–2021). The results demonstrate that policy innovation exerts a strong positive effect on green bond issuance, both directly and indirectly, by strengthening institutional capacity, enhancing sovereign green bond credibility, and improving renewable energy financing channels. Furthermore, the analysis confirms that policy-driven instruments moderate the adverse effects of crises, thereby safeguarding renewable energy investment flows even during systemic shocks.

Key findings reveal that (i) policy innovation significantly improves the attractiveness and credibility of green bond markets; (ii) institutional capacity and governance quality serve as mediating and moderating channels; (iii) green bond issuance contributes to renewable energy expansion and long-term market maturity; and (iv) external shocks such as financial crises and pandemics reshape but do not eliminate the positive role of innovative policies. The study also highlights important regional contrasts, with Asia displaying faster institutional adaptation and Africa requiring greater regulatory harmonization to unlock potential.

This review contributes to both theory and practice by advancing a theoretical framework that integrates policy innovation with green finance and by offering empirical evidence that underscores the importance of regulatory adaptability in achieving sustainable development goals (SDGs). Policy implications emphasize the need for governments to design flexible, transparent, and credible green bond policies, while investors are encouraged to align portfolios with climate-resilient assets. The paper concludes that green bonds, underpinned by robust policy innovation, can serve as catalytic tools for financing renewable energy transitions in emerging economies.

The objectives of this study are to identify the significant determinants of capital structure of the listed manufacturing companies in Bangladesh and to test the relevant capital structure theories. This study used a panel dataset including 74 manufacturing companies listed under 8 industries in Dhaka Stock Exchange (DSE) for the period of 2002-2011. The Unit Root tests suggested that all series were stationary. Using Panel Corrected Standard Error Regression Model and Random Effects Tobit Regression Model, all selected variables were found significant. Managerial ownership positively and Growth rate, Profitability, Debt service coverage ratio, Non-debt tax shield, Financial costs, Free cash flow to firm, Agency costs and Dividend payment negatively affect the capital structure. Tangibility and Liquidity ratio have positive relationship with Long term debt and negative relationship with Short term debt and Total debt. It was also found that Pecking-order theory and Static Trade-off theory are the most dominant capital structure theories in Bangladesh. The policy implication is that the financial managers should consider these determinants as yardsticks before taking the leverage decisions in order to choose the most favorable capital structure for the company so that it maximizes the shareholders' value.

The transition toward renewable energy in emerging economies requires innovative financing instruments that can bridge investment gaps while ensuring sustainability. Among such instruments, green bonds have gained prominence as a critical mechanism to mobilize private and institutional capital for climate-related projects. However, the expansion of green bond markets in emerging regions such as Africa and Asia has faced structural and institutional constraints. This review article investigates the role of policy innovation in accelerating green bond markets for renewable energy, focusing on evidence from emerging economies. By systematically integrating insights from more than 80 academic and policy sources, the paper provides a comprehensive framework that links policy innovation, institutional capacity, market maturity, and renewable energy financing to the expansion of green bond issuance. The study adopts a multi-method empirical synthesis, including descriptive statistics, correlation analysis, fixed effects regression, feasible generalized least squares (FGLS), and dynamic panel two-step system generalized method of moments (GMM). These approaches are complemented with robustness checks, sensitivity analyses, and sub-sample evaluations covering the 2007-2008 global financial crisis and the COVID-19 pandemic (2020-2021). The results demonstrate that policy innovation exerts a strong positive effect on green bond issuance, both directly and indirectly,

The relationship between agency cost and corporate performance of manufacturing companies is examined in this study. The sample of this study is based on companies listed in Bursa Malaysia for the period from 2011 to 2016. A regression analysis was done and corporate performance is regressed against the predictor variables which where leverage, size, growth, expense, and efficiency. Data for both the dependent and predictor variables were obtained from Bursa Malaysia. This study found that in the model, three out of five proxy of agency costs are significantly related to corporate performance which measured by return on equity (ROE). The three variables which significantly related to corporate performance (ROE) are efficiency, leverage, and size with p-value 0.0226, 0.0002 and 0.0002 respectively. The other two variables found that not significantly related to corporate performance (ROE) which are company growth and expense with p-value 0.6915 and 0.3871 respectively. Hence the stud...

Because corporate sustainability enhances corporate governance principles, firms are increasing their efforts to provide transparency and public disclosure. These efforts inform the public about the relationship between corporate governance and sustainability. Well-informed shareholders know about this relationship, which is becoming more apparent over time. In this study, we empirically examined the possible bilateral relationships between institutional ownership and a firm’s capital structure. Methodologically, we used an instrumental variable approach and the two-step generalized method of moments. The implications of this study are two-fold. First, we found that a firm’s debt level was low if its institutional ownership level was high. Institutional monitoring may substitute for external debt monitoring, leading firms to employ low leverage. Second, we found that the level of institutional ownership was high if a firm’s debt level was high. This association suggests that institu...

Banks cut dividends with great reluctance, as if addicted. Their addiction is a major cause of concern for regulators because it may endanger the whole banking system. However, banks may be rational in maintaining elevated dividends if agency costs are high and dividends substitute for shareholder monitoring. Banks may rely on persistent dividend policies to uphold a reputation among investors, especially during crises, when issuing equity becomes likelier. In support of this hypothesis, we find that, during and after the financial crisis, dividend persistence increases with the severity of agency costs banks are subject to; it decreases in the presence of concentrated shareholders, except when stress is acute. By contrast, share repurchases also substitute for shareholder monitoring but trigger no addiction.

This research aimed to examine the influence of internal factors on firm value. In this study the internal factors that profitability, dividend policy, and funding decisions. This study used six companies as a sample from a population of 14 manufacturing companies listed on Indonesian stock exchange in period of 2011-2015. The sample was determined by using purposive sampling. The results showed that profitability and funding decisions had positive effect on firm value, while dividend policy had a negative effect on firm value. The profitability, dividend policy, and funding decisions simultaneously had a positive effect on firm value. The value of the adjusted R2 of 0,798 indicated that the contribution of all the independent variables to account for the dependent variables was 79,8%.

This study aims to investigate the effect of foreign ownership and institutional ownership on the cost of equity capital with investment efficiency as a mediating variable. This research was built with agency theory. The research method used in this study is a quantitative method. The population used in this study are all non-financial companies listed on the Indonesia Stock Exchange (IDX) during 2018-2020. This study uses secondary data in the form of financial reports and annual reports obtained from the Indonesia Stock Exchange and the company's official website. The number of samples as many as 130 companies for 3 years were selected using purposive sampling method. The results of this study found that foreign ownership and institutional ownership have a positive effect on the cost of equity capital. The results of this study also found that foreign ownership, institutional ownership, and investment efficiency have a negative effect on the cost of equity capital. Finally, th...

Penelitian ini bertujuan untuk mengetahui apakah perusahaan tipe-J (agency cost of free cash flow tinggi) akan membuat laporan keuangan yang lebih konservatif dibandingkan perusahaan tipe non-J. Selain itu, penelitian ini melihat pengaruh efek moderasi hutang, dividen, stock repurchase, persistensi kas, dan tata kelola perusahaan dalam mempengaruhi hubungan antara tingkat agency cost of free cash flow dan tingkat konservatisme laporan keuangan perusahaan. Penelitian ini menggunakan dua ukuran konservatisme, yakni konservatisme ukuran akrual dan konservatisme nilai pasar. Sampel penelitian terdiri dari perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia untuk tahun 2007, 2008 dan 2010. Hasil penelitian menunjukkan adanya hubungan positif dan signifikan antara tingkat agency cost of free cash flow dan tingkat konservatisme laporan keuangan perusahaan untuk kedua ukuran konservatisme. Selain itu, penelitian ini mengindikasikan bahwa tidak terdapat pengaruh variabel moderasi atas hubungan kedua variabel tersebut. Kata kunci: Konservatisme, akrual, agency cost of free cash flow, hutang, dividen, stock repurchase, persistensi kas perusahaan, tata kelola perusahaan.

We examine the relationship between the number of bank relationships and firms' performance, evaluating possible differential effects related to firms' size. Our sample of firms from Italy includes many small firms, 99 percent of which are not listed and for which bank debt is a major source of financing. In the sample, 4 percent of the firms have a single bank relationship, and 66 percent of them have five or fewer relationships. We find that return on equity and return on assets decrease as the number of bank relationships increases, with a stronger relationship for small firms than for large firms. We also find that interest expense over assets increases as the number of relationships increases. Particularly for small firms, our results are consistent with analyses indicating that fewer bank relationships reduce information asymmetries and agency problems, which outweigh negative effects connected to holdup problems.

This study examines the mediating effect financial leverage on the relationship between ownership structure and cash holdings of listed service in Nigeria. The study employed correlational research design using data from the Nigeria Exchange Group (NGX) over the period of fourteen years (20102023). Data was extracted from the annual report and accounts of the seventeen out of twentytwo listed services firms for the period through the application of filter from a purposive sampling technique. The data was subjected to descriptive statistics, correlation and Structural Equation Adjusted Modeling (SEM) were used as techniques for data analysis while bootstrapping result was used to determine the level of significance of the indirect effects and the hypotheses formulated were tested. The findings demonstrate that ownership structure does not influence financial leverage, this implies that firms with greater managerial, Institutional and foreign investors are likely to hold more cash for day-today activities while financial leverage affects cash holdings of the sampled firms. Moreover, ownership structure directly influences cash holdings without the influence of financial leverage decision as a mediator. Based on this finding, the study recommended that management of listed services firms should continue to strengthen governance frameworks to ensure that both foreign and institutional stakeholders prioritize effective cash management practices. In the same vein, policymakers encourage local ownership structure due to the influence of this type of ownership on a firm's capital structure and its joint importance effect with firm investments. In the same vein, management should develop robust cash management strategies to balance liquidity needs with debt obligations. This can include optimizing cash flow forecasts and managing working capital efficiently. 1 .

The views expressed in this working paper are those of the author(s) and do not necessarily represent the official views of the Central Bank of the Republic of Turkey. The Working Paper Series are externally refereed. The refereeing process is managed by the Research and Monetary Policy Department.

This study investigates the determinants of capital structure of non-financial public firms quoted in Borsa Istanbul. We explore the effects of firm-specific, industry-specific and macroeconomic variables on book and market leverages by employing panel data. In addition, we study the effects of these variables on short-term and long-term leverage ratios. The results indicate that firm-specific factors have similar effects on both book and market leverage ratios except the effect of growth opportunity. The size of a firm is positively associated with its leverage ratio, particularly with long-term leverage ratio. Tangibility is negatively related to the short-term leverage ratio whereas it is positively related to the long-term leverage ratio. Profitability and liquidity have negative effects on leverage, particularly on short-term leverage ratio. It is also observed that the firms tend to follow their peers in their capital structure decisions. The effect of macroeconomic variables ...

La política de dividendos en los bancos privados espaiioles: modelos de comportamiento El propósito de este trabajo es contrastar diferentes modelos de comportamiento en política de dividendos. La investigación se efectúa sobre una muestra de bancos privados españoles, durante los subperiodos 1976-80 y 1981 -85. Se contrastan tanto la hipótesis de ajuste parcial como la de contenido informativo, presentándose la estimación de un modelo integrado. Los resultados empíricos confirman que en el primer subperiodo podemos aceptar que sólo uno de los efectos es instantáneo, mientras que en el segundo ambos lo son.

The purpose of this study was to determine the effect of good university governance and reputation risk management on the public accountability of private universities, especially Halmahera University. The two things above, namely the practice of good university governance and reputation risk management are two interrelated things and must be accounted for to gain trust and strengthen legitimacy from the public as a private university of high quality, highly competitive, and have an impact on the progress of society. This study used a quantitative approach, the data were analyzed using the SPSS version 26 program on 98 samples of permanent lecturers at Halmahera University through a questionnaire that had passed the validity and reliability test. The data analysis aimed to examine the effect of good university governance and reputation risk on public accountability, and good university governance against reputational risk by path analysis method. The results show that Good Universit...

IAS-24 of the International Financial Reporting Standards focuses on the concept and disclosures of related party transactions (RPTs) for a reporting entity. This study examines the interrelationship between RPTs (as disclosed under IAS-24), agency theory, ownership structures and firm performance. Our sample includes nonfinancial companies indexed by the KSE-100 of the Pakistan Stock Exchange during 2006–15. To run the regression models, we determine the regression assumptions, normality, heteroskedasticity, autocorrelation and multicollinearity. We investigate the impact of different RPTs, including cash inflows and outflows, whereas other studies generally look at the impact of RPTs on firm performance in totality. The empirical analysis suggests that institutional ownership has a positive, significant impact on firm performance. Related party purchases have a significant, negative impact on performance, resulting in the expropriation of institutional ownership. RPTs that generat...

This research aims to investigate how green accounting variables, liquidity, and corporate social responsibility impact profitability, with company size acting as a moderating variable in firms from the raw material sector listed on the IDX over the period from 2020 to 2023. The sample for the study was selected using a purposive sampling method, resulting in 7 firms being included in the sample. Consequently, the total research sample for the four-year period consisted of 28 observations. To analyze the relationships among the studied variables, multiple regression analysis and moderate regression analysis were conducted using IBM SPSS Statistics 26. The findings of the study reveal that green accounting exerts a negative and insignificant impact on profitability, while liquidity demonstrates a positive yet insignificant influence on profitability, and corporate social responsibility also shows a positive but insignificant effect on profitability. Furthermore, the size of the company does not influence the connection between green accounting and profitability. Additionally, company size does not affect the relationship between liquidity and profitability. However, the findings of the previous research indicate that company size can influence the relationship between corporate social responsibility and profitability.

Significant positive stock price reaction to stock repurchase announcements has been well documented in the finance literature. Most studies on repurchase focus on the average positive reaction; however, 30 percent of the repurchasing firms experience negative abnormal returns at announcement. This study examines the apparent heterogeneity in the stock price reaction to stock repurchase. The results show that the market reaction to repurchase announcements is determined by firm specific factors and is based on the overall costs and benefits analysis by the market of the stock repurchase program. The results are consistent with conventional signaling models and agency theories.

Significant positive stock price reaction to stock repurchase announcements has been well documented in the finance literature. Most studies on repurchase focus on the average positive reaction; however, 30 percent of the repurchasing firms experience negative abnormal returns at announcement. This study examines the apparent heterogeneity in the stock price reaction to stock repurchase. The results show that the market reaction to repurchase announcements is determined by firm specific factors and is based on the overall costs and benefits analysis by the market of the stock repurchase program. The results are consistent with conventional signaling models and agency theories.

This paper outlines and tests two agency models of dividends. According to the "outcome" model, dividends are the result of effective pressure by minority shareholders to force corporate insiders to disgorge cash. According to the "substitute" model, insiders interested in issuing equity in the future choose to pay dividends to establish a reputation for decent treatment of minority shareholders. The first model predicts that stronger minority shareholder rights should be associated with higher dividend payouts; the second model predicts the opposite. Tests on a cross-section of 4,000 companies from 33 countries with different levels of minority shareholder rights support the outcome agency model of dividends.

Most international studies in this area of research use country-level data. , , use firmlevel data for cross-country comparisons of capital structure. and also analyze how country variables affect the characteristics of bank loans. These papers offer mixed evidence on the influence of institutions on firm capital structure. in an analysis of large listed companies in G-7 countries find that factors identified as cross-sectionally correlated with firm leverage in the United States are similarly correlated in other countries as well. suggest that the same determinants of capital structure prevail in ten developing countries. This research together suggests that institutional differences are unimportant in both developed and developing countries, although the authors compare separate regressions for each country and do not use explicit variables for the institutional environment in their estimations. explicitly introduces creditor right protection in the analysis of a sample of listed and unlisted companies in eight European countries. Her results suggest that the relevance of institutional variables depends on firm size. Larger listed companies have easier access to international financial markets, so their corporate finance decisions are less subject to the institutional constraints in domestic markets. Institutional characteristics, however, have a greater impact in unlisted companies. For these companies, stronger creditor protection makes loans for investing in intangible assets more available and guarantees access to long-term debt for firms in sectors with highly volatile returns. find that institutional factors are critical determinants of firm capital structure in a cross-section of 39 developed and developing countries. A country's legal and tax system, level of corruption, and the availability of

The objective of this study is to implement Analysis of Moment Structure (AMOS) at the same time analysing the power of corporate governance on Post -Seasoned Equity Offerings (SEO's) performance as well as in determining whether agency costs exist as a mediating variable between them. We conjecture that the mediating function of agency costs reduction is fundamental to the causal relationship between corporate governance and Post-SEO underperformance. Failure to tackle agency costs as a mediating variable may perhaps be one reason for the inconclusive findings in the allied literature. This study intends to focus on an SEO sample, for the reason that it is essential to evaluate how better corporate governance mechanisms can enhance SEO performance by estimating the relationship between different variables. To achieve this, the study will apply the approach and analyse SEOs in Nigeria from 2005-2015.

This paper presents evidence that firms conserve cash to manage employees' perceptions of the risk of becoming unemployed. Employing a matched sample design and using state level changes in unemployment insurance (UI) benefits to proxy for unemployment risk, we test the hypothesis that cash holdings and unemployment risk are positively related. We find an economically and statistically significant association between decreases in cash holdings, following an increase in UI benefits (i.e., lower unemployment risk). Our findings are robust to alternative specifications and we find that the positive relation between cash holdings and unemployment risk is more pronounced for firms that are more labor intensive, have a high layoff propensity, have a higher fraction of low-wage workers, and are in industries with a higher fraction of UI recipients. Overall, our results are consistent with the idea that cash holdings are affected by not only shareholders but also other stakeholders: namely employees.

Purpose– The purpose of the current study is to investigate the existence of a negative synergy effect of internationalization and firm size on firm performance for publicly traded US hotels.Design/methodology/approach– The study performs the two-way fixed-effects model to investigate the proposed negative synergy effect.Findings– The findings do not support the proposed negative synergy effect, but support the positive synergy effect of internationalization and firm size on performance.Originality/value– This study examines the hypothesis developed based on the agency cost theory using the hotel industry's unique monitoring cost argument. However, findings support the opposite, implicitly suggesting that the hotel's monitoring cost in the international franchising context may not be severe as some expect.

The company not only aims to seek profit, but also to maximize the prosperity of its shareholders by maximizing the value of the company. Within the company, there are three people who have different interests, namely, company owners, shareholders and managers. When the company generates free cash flow, there will be differences in the interests of the parties who make the work contract and create a conflict that will cause the company to pay costs, which is called agency cost. The result of this difference in interest can also affect the company's financial performance, because the company's finances are not going well. The purpose of this study was to determine the effect of free cash flow (FCF) on agency cost and financial performance in financial sector companies listed on the IDX in 2015-2016. The type of research used in the research is Explanatory Research, with a population of 83 companies listed on the Indonesian stock exchange in the financial sector in 2015-2016. ...

This paper re‐examines the dividend policy issue by conducting a simultaneous test of the alternative explanations of corporate payout policy using a two‐step procedure that involves factor analysis and multiple regression. Several new proxies for theoretical attributes that have appeared in the literature are introduced, including the role of managerial dimensions in determining dividend policy. Strong support is found for the transaction cost/residual theory of dividends. pecking order argument, and the role of dividends in mitigating agency problems. Strong support is also found for the role of managerial consideration in affecting the firm's payout policy; specifically, firms that maintain stable dividend policies and firms that enjoy financial flexibility pay higher dividends. The results appear to support the tax clientele argument.

We find that firms that treat their employees better are less likely to be acquired. The shareholders of employee-friendly targets also receive lower premiums and smaller share of the surplus created by the deal. We also show that bidders tend to improve their employee policy following the acquisition of R&D-intensive targets. Furthermore, the improvement of employee policy is stronger when bidders increase their R&D expenditures in the new firm. The most likely explanation of our results is the importance of human capital in the production process. The agency conflict between managers and shareholders does not seem to be an important factor for employee policy.

We consider IPO firms from 1970 to 2001 and examine the evolution of their insider ownership over time to understand better why and how U.S. firms that become widely held do so. In our sample, a majority of firms has insider ownership below 20% after ten years. We find that a firm's stock market performance and trading play an extremely important role in its insider ownership dynamics. Firms that experience large decreases in insider ownership and/or become widely held are firms with high valuations, good recent stock market performance, and liquid markets for their stocks. In contrast and surprisingly, variables suggested by agency theory have limited success in explaining the evolution of insider ownership.

PurposeThe purpose of this research is to examine whether board gender diversity reduces the agency costs of firms in the context of Chinese listed firms.Design/methodology/approachThis paper uses a large sample of 23,340 firm-year observations of Chinese listed companies during 2004–2017. The authors use ordinary least squares regressions as the primary methodology with a wide range of methods to control for endogeneity and to check robustness, including the fixed-effect method, instrumental variable approach, lagged gender diversity measures, propensity score matching, Blau index, Shannon index and industry-adjusted measures of agency costs.FindingsThe evidence reveals that the participation of female directors in corporate board reduces agency costs, which correlates with conflicts of interest. Moreover, gender-diverse boards are more effective in state-owned enterprises (SOEs), in which agency issues are more severe. Female directors also provide better monitoring roles in more-...

The research examines the effect of Chinese Astrology (shio) and managerial ownership on firm's performance. The research also examines other issue of agency problem which is called managerial ownership. The separation between the principal with ownership function and agent with control function leads to a potential conflict called agency conflict. Sample is manufacturing firms listed in Indonesia Stock Exchange for the period of 2013-2015. The results of this study indicate that Chinese Zodiac of the CEOs have no effect on the company's performance, while managerial ownership positively affects the company's performance. Financial ratios used to measure company's performance are profitability ratios, such as Return on Assets (ROA) as the main parameter and Return on Equity (ROE) as supporting parameter or robustness with no significant effect which aims to confirm the effect of managerial ownership on the company's performance.

The research examines the effect of Chinese Astrology (SHIO) and managerial ownership on firm's performance. SHIO is Chinese astrology based on the date of birth to predict personality as such traits, lifestyle, health and career (Liao, 2001). Personality of the managers will affect firm's performance as managers managed daily activities of the firm. Therefore the research argued that manager's SHIO will affect firm's performance. The research also examines other issue of agency problem which is called managerial ownership. The separation between the principal with ownership function and agent with control function leads to a potential conflict called agency conflict. Management (agent) might engage in self-dealing to maximize their personal welfare, entering into decision making that benefits themselves over shareholders. Therefore management should grant an ownership to align their interest with shareholders interest. Sample is manufacturing firms listed in Indonesia Stock Exchange for the period of 2013-2015. The results of this study indicate that Chinese Zodiac of the CEOs have no effect on the company's performance, while managerial ownership positively affects the company's performance. Financial ratios used to measure company's performance are profitability ratios, such as Return on Assets (ROA) as the main parameter and Return on Equity (ROE) as supporting parameter or robustness with no significant effect which aims to confirm the effect of managerial ownership on the company's performance.

This paper identi…es a fundamental con ‡ict of interest between managers and shareholders in risk taking decisions and explores its implications for the relation between external governance mechanisms, corporate investment, and value. Using a dynamic panel GMM estimator to address endogeneity, we show that antitakeover provisions (ATPs) lead to more conservative investment decisions, including relatively less investment in R&D, more investment in PPE, and more diversifying acquisitions, and that these e¤ects are concentrated among high idiosyncratic volatility …rms -i.e., …rms with agency costs of idiosyncratic risk. In addition, we …nd that ATPs lead to large drops in …rm value, and that this negative valuation e¤ect of ATPs is also concentrated among high idiosyncratic volatility …rms -i.e., the …rms for which ATP-induced conservatism is more pronounced. These results suggest that ATPs lead to excess managerial conservatism. Thus, by curbing managers'tendency to avoid value-enhancing risks, corporate governance reforms can create value for shareholders.

The social cognitive theory emphasizes the risk-taking behavior of an entrepreneur, which leads him to make the right decisions. In this regard, this study formulates the concept of the cognitive CEO through the DAE statistical technique. Specifically, CEO attributes such as CEO age, CEO compensation, CEO tenure, goodwill, and the number of CEO-attended meetings are used as inputs that influence the intangible assets, the output. Chinese SMEs have been selected for empirical analysis for the years 2014-2018. The empirical results reveal that having a cognitive CEO augmented corporate sustainability, while agency cost and the number of supervisors strongly diminished corporate sustainability. Meanwhile, high earnings per share and high total assets are vehicles for maintaining the sustainable growth of firms. Additionally, it is indicated that firms with a loan burden cannot maintain sustainable corporate growth. Lastly, the execution of 2SLS and GMM instrumental regressions authenticate the veracity of results.

This paper analyzes the effect of CEO succession via overall hierarchical jumps on Chinese firm performance and agency cost. It categorizes hierarchical jumps into low, medium and high level. The study reveals through panel regression analysis that the CEOs appointed via medium hierarchical jumps substantially enhance firm performance. Conversely, the successors appointed through low and high hierarchical jumps have relatively no effect on firm profitability. Conclusively, this research evaluates that the aged CEOs should be preferred among the CEOs successors via high hierarchical jumps, which have mitigated the agency problem decisively.

Using a large survey database on the corporate governance practices of privately held Colombian firms, we investigate why firms have boards, and how that choice, and the balance of power among the board, controlling shareholders, and minority shareholders impact the tradeoffs between control, liquidity, and growth, and ultimately, firm performance. We find that the probability of having a board increases with the number of shareholders and in family firms. When the preferences of controlling and minority shareholders diverge, as with respect to capital structure and dividend policy, boards support controlling shareholders' decisions, thereby exacerbating the agency conflict between the two groups of shareholders.

Using a large survey database on the corporate governance practices of privately held Colombian firms, we investigate why firms have boards, and how that choice, and the balance of power among the board, controlling shareholders, and minority shareholders impact the tradeoffs between control, liquidity, and growth, and ultimately, firm performance. We find that the probability of having a board increases with the number of shareholders and in family firms. When the preferences of controlling and minority shareholders diverge, as with respect to capital structure and dividend policy, boards support controlling shareholders' decisions, thereby exacerbating the agency conflict between the two groups of shareholders.

V tomto článku se zabýváme náklady zastoupení v koncernech. Záměrem je zjistit, zdasložitější koncerny (a obecně složitější ekonomické systémy) dávají více prostoru ke vznikunákladů zastoupení. Výsledky jsou nejednoznačné, nicméně se zdá, že složitější koncernymají více výhod, než nevýhod a vyhnutelné náklady zastoupení se daří efektivně eliminovatna nižších úrovních koncernové struktury. Zdá se, že hlavní příčinou nákladů zastoupení jetedy informační asymetrie a největší část vyhnutelných nákladů zastoupení vznikáv nejvyšších patrech koncernové hierarchie.

Using 4-dimensional panel data (time, industry, country, companies) weexamine the differences between European quoted and non-quotedcompanies at the level financial performance and some financial ratios.We find that quoted companies perform significantly better not only interms of profit, but also in terms of cash flow generation. We also findsome interesting differences in financial structure, liquidity and collectionand credit period, not only from the perspective of quotation, but alsobetween European regions (thus different trade habits), e.g. significantlylonger credit period and collection period for countries with more relaxedtrade habits (Spain, Italy, France). Our findings have some indirectimplications for agency theory, for view of different accounting standardsconservatism and earnings management, as well as (mainly) for businessand stock valuation and financial planning.