Agency Theory Perspective Research Articles

The Impact of Corporate Governance on the Financial, Governance and Social Disclosure at Islamic Banks in Malaysia

The study examines the impact of board and audit committee on the disclosure of Islamic financial and social reporting (IFSR) among Islamic banks in Malaysia. Drawing on surveys this study seeks the views of accountants working in Islamic banks regarding the importance of items in the IFSR index developed by Marsidi et al. (2016). The annual reports are thereafter used to examine the score of the IFSR for the Islamic banks as well as to collect the data for the related variables. The multivariate regression findings suggest that board size is a significant factor in explaining the IFSR at Islamic banks in Malaysia. Such finding indicates that the size of board, which is represented by the number of directors who sit on the board of directors, is a crucial governance mechanism in achieving the aims of Islamic banks. The result also meets the role of corporate governance from the perspective of Islamic agency theory. The results of the study should not be generalised to year’s prior, or after, the years of examination. The finding is perceived as contributing towards the suitable formation of board of directors specifically in terms of the total number of directors with respect to the financial, governance and social disclosures at Islamic banks. The study uses the Islamic agency theory to explain the governance practices and IFSR disclosures within the context of Malaysian Islamic banks. As such, the paper contributes towards the development and sustainability of Islamic banks both in Malaysia and throughout the globe.

Analysis of Merger and Acquisition in Pakistan

We examine the financial performance of firms in the post-Merger and acquisition period for firms listed on the Karachi Stock Exchange by exploring various motives of merger and acquisitions offered by theoretical and empirical literature. Specifically, we explore these motives in the context of the theory of synergy, agency theory and behavioral finance perspectives. Empirical results for agency theory shows the presence of empire building motives that lead to the underperformance of firms in post-merger and acquisition period. The study finds no support for managerial risk aversion hypothesis of agency theory in Pakistani market. Empirical results do not find any evidence to support the presence of managerial hubris or overconfidence proposition but we do find evidence in support of the escalation of commitment hypotheses and its impact on post-merger and acquisition performance.

The Impact of Venture Capital on GEM Companies’ Deviant Strategy

From the perspective of resource-based theory, agency theory and signal transmission theory, this paper examines the impact of venture capital on the deviant strategy of enterprises by studying the data of GEM listed companies from 2009 to 2016. The study finds that there is a smaller deviant strategy in companies supported by venture capital than not supported. Through the further analysis of venture capital, this paper finds that the impact of specific characteristics of venture capital on corporate deviant strategy is more significant: private and state-owned background characteristics of venture capital, compared with foreign investment background characteristics of venture capital, the companies supported by the former two own smaller deviant strategy; the enterprise supported by venture capital of alliance investment characteristics, phased investment characteristics, late entry into the enterprise characteristics owned smaller deviant strategy.

Asset Structure Impact on Capital Structure of Capital Market-Listed Firms in Indonesia and Malaysia

The debt was able to be used by the firm as a source of funds for investment-related activities, especially when the amount of retained earnings was not sufficient to cover the amount of investment needed. Naturally, the use of debt definitely caused the agency conflict between firm shareholders and debt holders. To reduce this conflict, the existence of fixed assets as collateral was needed when the firm decided to borrow money from debt holders. The purpose of this study was to prove the agency theory perspective by testing an impact of asset structure on the capital structure of firms. The population of this study was the firms listed on the Indonesia Stock Exchange and Malaysian Stock Exchange. The firms as a sample were taken from the population by conducting a stratified random sampling method. The pooled data regression model was used as the data analysis method. This result of this study showed that asset structure had a positive impact on the capital structure. It meant the causal relationship between asset structure and capital structure happened and was supported by the agency theory perspective. DOI : https://doi.org/10.26905/jkdp.v21i3.1312

An investigation of IT-intervention adoption in public distribution system: A stakeholder and agency theory perspective

This paper attempts to explore the adoption of changes introduced by an IT-intervention in the context of a social welfare scheme. Using case study methodology, we have studied the changes introduced through the project ‘CORE PDS’ (Centralized Online Real-time Electronic Public Distribution System) in the Chhattisgarh Public Distribution System (PDS). CORE PDS was a far-sighted project aimed to integrate the retailers (Fair Price Shops, FPSs) with IT infrastructure. It simultaneously introduced two changes. One was an automated transaction processing system while another was the provision of portability for the beneficiaries. After 2 years of its implementation it was observed that despite the government’s diligent efforts, only the automated transaction processing system was adopted, while portability was discarded by the FPSs. We use the theoretical lenses of stakeholder theory and agency theory for identifying reasons for this partial failure. Our analysis suggests that information system (as monitoring and reporting mechanism), outcome uncertainty, risk aversion and goal conflict play critical roles in the adoption of changes. Changes with higher monitoring, lower outcome uncertainty and lower goal conflict are easily adopted, and on the other hand, lower monitoring, greater outcome uncertainty and higher goal conflict result in lower possibility of adoption.

OWNERSHIP STRUCTURE AND INTERNATIONALIZATION: AGENCY PROBLEMS AND DELISTING IN BRAZIL

ABSTRACT Purpose: This study aimed to analyze determinants related with the delisting of Brazilian companies, through the analysis of the problems of agencies coming from structures of property/control and the internationalization of organizations. Originality/value: The present work seeks to fill the existing gap of more detailed studies related to the delisting of companies in the Brazilian capital market. In addition, it presents a contribution to the literature through the analysis of the relationship between Corporate Governance, Corporate Internationalization and Deslisting from the perspective of Agency Theory. Design/methodological/approach: Four econometric models based on existing literature were elaborated and then analysis of logit regressions with panel data. For data of all organizations listed in BM&FBOVESPA in the period between 2006 and 2015, period in which it was found that 205 businesses closed down their capital. Findings: As a result, it was observed that when considering the year before the delisting, organizations which have greater concentration of property had higher probability of closing their capital, which does not occur when analyzing the control structures. As to the entrance mode into international market, it was noted that there is a negative relationship between entrance mode non-patrimonial and volunteer delisting.

CEO Outside Board Service and Managerial Ability

Does CEO outside board service promote managerial ability? The increasing attention on CEO outside board service implores to understand whether serving on outside boards is a symbolic mechanism that leads to excessive time commitments and thus an inability to fulfill executive duties on the home board or whether it indeed helps to heighten managerial abilities by enabling access to a diverse set of external knowledge, skills, and connections on the host board. In this paper, we analyze the effects of CEO outside board service on managerial ability and find support for the hypothesis that outside board service limits the ability of CEOs to manage their home firms effectively. However, from a resource- dependence perspective, this effect is contingent on the quality of the host board and from an agency theory perspective, it is contingent on the effective monitoring and alignment mechanisms of the home board.

Cues and Clues that Influence Customer Trust in Agent of Service Supply Networks

The traditional supply chain models may fit well with the physical movement of goods but are problematic when applied to coproducing service experiences with customers. While there has been progress with regard to developing service supply chain models that more thoroughly capture service operations, none have sufficiently addressed how a customer chooses who will provide the service. This paper takes an agency theory perspective to frame the importance of trust building clues and cues created by an agent who offers customers access to the network of resources required to coproduce the desired experience. Our paper argues that trust is the key to a customer’s selection of an agent for coproduction and offers trust creating strategies that agents can use to influence this selection.

Marketing agency – client relationships: towards a research agenda

PurposeThis paper aims to present the first systematic review of the literature relating to the relationships between organisations and their marketing agencies, the agency–client relationship, and presents a concept matrix that identifies the key areas of investigation, and topics where further research would be beneficial. As agencies play a pivotal role in operationalising marketing strategy, this relationship is central to marketing theory, management and practice.Design/methodology/approachA systematic review of the literature was performed using key databases and search terms, and filtering on the basis of criteria relating, for example, to relevance and format, to create a core set of refereed papers on the agency–client relationship in the marketing and advertising domains. Bibliographic and thematic analysis was used to profile the literature in the dataset, and to draw out key themes.FindingsThe paper provides an analysis of the extant knowledge base, including key themes, journals and research methods. The following themes emerged from the literature, and are used to elaborate further on the existing body of knowledge: conflict, client account management, contracts and agency theory, cultural and international perspectives and co-creation. An agenda for future research is proposed that advocates a focus on theoretical foundations, research strategies and research topics and themes.Originality/valueThis is the first systematic review of the literature on agency–client relationships, which is scattered across disciplines and informed by several theoretical perspectives. Given the increasing complexity of agency–client relationships in the digital age, and increasing need to understand “marketing-as-practice”, the coherent overview offered by this paper is of particular value for guiding future research.

Do family CEOs benefit investment efficiency when they face uncertainty?

PurposeThis paper aims to investigate whether family CEOs benefit investment efficiency under uncertainty with Chinese family firms and to test the moderating effect of ownership structure, including family ownership, the separation of family control from family ownership and the multiple large shareholder structure.Design/methodology/approachFixed-effects models are designed for a sample of 5,734 firm-year observations for Chinese family firms from 2009 to 2014.FindingsThe results show that investment efficiency is low under uncertainty, and having family CEOs can reduce this negative relationship. Further analysis reveals that for firms with family CEOs, the negative effect of uncertainty on investment efficiency is weaker when the family has higher ownership, when family control is less separated from family ownership, or when family firms have multiple large shareholder structures.Research limitations/implicationsThe authors do not distinguish founder-CEOs and descendant-CEOs. Most of Chinese family firms are still managed by founders, so the authors cannot explore the generation effect although different generations manage firms differently. Because family succession is becoming a more and more important problem in China, further research may be able to explore the generation effect.Practical/implicationsThis paper suggests that in emerging economies with weak investor protection, outside minority shareholders can avoid expropriation from family owners by investing in firms with large family ownership, little separation of family control from ownership or multiple large shareholder structure. In addition, policymakers can encourage institutional investors to participate in family business to improve corporate governance.Originality/valueDrawing on both Type I and Type II agency theory perspectives, the authors argue that although family CEOs can generally benefit firms’ investment efficiency, the benefits vary with firms’ ownership structure. In other words, family CEOs are not absolute agents or stewards but some extent of combination of both.

The Impact of Family Control on Dividend Policy: Evidence from Indonesia (pp 147-156)

This paper examines the relationship between family control and dividend policy in Indonesia. There are three possible explanations for the relationship. The expropriation hypothesis predicts that family control has a negative impact on dividend payouts. Meanwhile the reputation hypothesis and the family income hypothesis predict that family control has a positive impact on dividend payouts. Using a panel data of Indonesian publicly listed firms in the period of 2003-2009, the results shows that family control has a significant negative impact on dividend payouts, dividend yields and likelyhood to pay dividends. The results control for other variables that may potentially affect dividend payments such as growth opportunity, debt, profitability, firm size and firm age. From agency theory perspective, the finding is consistent with the argument that family controlling shareholders prefer lower dividends, in order to preserve cash flows that they can potentially expropriate (the expropriation hypothesis). Keywords: Family Control, Dividends, Agency Theory

PENGARUH TANGGUNG JAWAB DAN LOCUS OF CONTROL DALAM KEPUTUSAN INVESTASI POURING GOOD MONEY AFTER BAD

Sometimes, a manager (agent) must make difficult decisions like to decide whether to continue or to commit resources to a risky and highly uncertain project (to escalate it), or to abandon it, after a great deal of corporate investment, and possibly personal commitment and reputation, have already been used up. In agency theory perspectives, this decision could be done when there must be a condition of information asymmetry, and an incentive for manager to shirk. This study try to strenghten manager’s responsibility variable and to explore locus of control variable in the relationship with pouring good money after bad investment decision. 95 undergraduate students participate in this study and not found significant results for the alternative hypotheses. It’s suggested that undergraduate students weren’t ready for investment decision researchs, especially when dealing with risky projects, because of their lack of knowledge and experiences.

Board Attributes and Financial Performance: The Evidence from an Emerging Economy

In last few decades, impact of corporate governance and financial performance gained tremendous attention of the researchers and policy makers. From agency theory and resource dependence perspective different characteristics of the board can help to achieve the goal of good governance and ultimately affect financial performance. Abundant literature is available on the link between board parameters and firm's financial performance but for developing economies the exploration is still in drought. Considering this, the purpose of this study is to explore the impact of board characteristics on financial performance of the listed companies in Pakistan Stock Exchange, Pakistan. Various board parameters such as board size, number of meetings, board independence, audit committee independence, gender diversity in board and executive directors' compensation are addressed in this study. Data for this research is collected from the listed companies of Pakistan Stock Exchange (PSX) represent six different sectors of the economy. The annual data of selected companies collected from 2009 to 2015. The overall year–firm observations are 1074. Data related to board characteristics and financial performance collected from the audited published annual reports and balance sheets of the selected companies as well as from the publications of State Bank of Pakistan. Accounting and market measures are taken as indicators of financial performance and consider as the outcome variables in this study, whereas the board characteristics are taken as explanatory variables. Panel Data regression analysis revealed that, after controlling for size of firm, board size, audit committee independence are positively linked with firms financial performance, whereas board independence and gender diversity are negatively associated with firms financial performance. However, board meetings found to be insignificant variable. Furthermore, Analysis of Variance describe that there is significant variation with respect to financial performance and board parameters among different sectors of the economy. The study determines that board characteristics influence the firm financial performances in emerging country's perspective have some consistent findings. However, some findings differ as compared to developed country's context, which limit the generalization of the study.

The Relationship between Institutionalism and Nepotism in Family Businesses through Agency Theory Perspective

Günümüzde aile işletmeleri, gerek dünyada gerek Türkiye’de işletmelerin oransal olarak
 önemli bir kısmını oluşturmaktadır. Aile işletmelerinde, özellikle üst yönetim pozisyonlarına
 yapılan atamalarda nepotizme gidildiği görülmektedir. Bu durum, özellikle görevlendirilen aile
 üyeleri ve yakınlarının gerekli nitelikleri taşımaması durumunda önemli sorunları beraberinde
 getirmektedir. Bunun önüne geçmenin yollarından biri, işletme sahipliği ile yönetimini birbirinden ayırmaktır. Kurumsallaşma bunu sağlamanın bir yolu olarak görülmektedir. Bu çalışmanın
 amacı, aile işletmelerinde kurumsallaşma düzeyi ile nepotizm arasındaki ilişkiyi belirlemektir.
 Bu kapsamda, kurumsallaşma ve nepotizm ölçeklerini kapsayan bir anket formu oluşturulmuştur. Anketler, kolayda örnekleme yöntemi ile 19-30 Eylül 2016 döneminde, Balıkesir Organize
 Sanayi Bölgesi’ndeki orta ve büyük ölçekli yedi aile işletmesinde uygulanmıştır. Ankete 232
 işgören katılmıştır. Araştırma sonuçları, kurumsallaşma ile nepotizm arasında anlamlı ve negatif bir ilişkinin olduğunu göstermektedir. Bu çalışmanın en önemli kısıtı, çalışmanın, Balıkesir
 Organize Sanayi Bölgesi’ndeki yedi aile işletmesinde yapılmış olmasıdır.

The Impact of Family Control on Dividend Policy: Evidence from Indonesia

This paper examines the relationship between family control and dividend policy in Indonesia. There are three possible explanations for the relationship. The expropriation hypothesis predicts that family control has a negative impact on dividend payouts. Meanwhile the reputation hypothesis and the family income hypothesis predict that family control has a positive impact on dividend payouts. Using a panel data of Indonesian publicly listed firms in the period of 2003-2009, the results shows that family control has a significant negative impact on dividend payouts, dividend yields and likelyhood to pay dividends. The results control for other variables that may potentially affect dividend payments such as growth opportunity, debt, profitability, firm size and firm age. From agency theory perspective, the finding is consistent with the argument that family controlling shareholders prefer lower dividends, in order to preserve cash flows that they can potentially expropriate (the expropriation hypothesis).Keywords: Family Control, Dividends, Agency Theoryhttps://doi.org/10.21632/irjbs.9.2.147-156

The Impact of Family Control on Dividend Policy: Evidence from Indonesia

This paper examines the relationship between family control and dividend policy in Indonesia. There are three possible explanations for the relationship. The expropriation hypothesis predicts that family control has a negative impact on dividend payouts. Meanwhile the reputation hypothesis and the family income hypothesis predict that family control has a positive impact on dividend payouts. Using a panel data of Indonesian publicly listed firms in the period of 2003-2009, the results shows that family control has a significant negative impact on dividend payouts, dividend yields and likelyhood to pay dividends. The results control for other variables that may potentially affect dividend payments such as growth opportunity, debt, profitability, firm size and firm age. From agency theory perspective, the finding is consistent with the argument that family controlling shareholders prefer lower dividends, in order to preserve cash flows that they can potentially expropriate (the expropriation hypothesis).

Revisiting the Effect of Family Involvement on Corporate Social Responsibility: A Behavioral Agency Perspective

This paper sheds light on the incongruent findings concerning the relationship between family involvement and firms’ corporate social responsibility (CSR). While prior studies have mainly taken the perspective of families’ socioemotional wealth preservation, we approach this relationship from the perspective of behavioral agency theory, highlighting the important role played by CEOs’ family memberships. Specifically, we posit that family firms are more likely to invest in CSR when their CEOs are members of the controlling families. Furthermore, we examine how family firms can employ long-term incentives to encourage non-family CEOs to act in the interests of the controlling families to preserve SEW and thus enhancing family firms’ CSR performance. We tested our hypotheses using hand-collected data of family firms included in the S&P 500 index, in the period of 2003–2010. The empirical findings support our hypotheses that (a) family firms with family members as the CEOs have better CSR performance and (b) family firms tend to provide a high level of long-term incentives to non-family than family CEOs. In addition, long-term incentives strongly motivate CEOs to improve firms’ CSR performance, regardless of their family memberships.

Jalan Panjang Menuju Pengesahan APBD: Berdasarkan Sudut Pandang Agency Theory

Process pre-prosperous the preparation, the preparation, discussion and ratification of the budget should be based on the applicable legislation (Permendagri No. 13/2006 junto Permendagri No.59/2008). Phenomenon that occurs, still many local government that overdue their budget, although there are sanctions should that happen. This research aims to provide a more comprehensive explanation of the executive and legislative relationship in Local Government X is reviewed from the perspective of agency theory to ratification of local government annual budget. This study uses qualitative methods a descriptive case study.Based on the results of this research was concluded that (1) The lateness of the budget local governmet X is because of delays of drafting the support documents that is required in the budget by the executive, thus causing delays of filing budget to the legislature; (2) viewed from the side agent (the sectoral egos of executive) mean while, from the principle/legislative (interest group / political party and a constituent) also coloring the process.

Dealing with defaulting suppliers using behavioral based governance methods: an agency theory perspective

Purpose The purpose of this paper is to explore factors influencing the effectiveness of buyer initiated behavioral-based governance methods (BBGMs). The ability of BBGMs to improve supplier performance is assessed considering power imbalances and the resource intensiveness of the BBGM. Agency Theory is used as an interpretive lens. Design/methodology/approach An explorative multiple case study approach is used to collect qualitative and quantitative data from buying companies involved in 13 BBGMs. Findings Drawing on Agency Theory several factors are identified which can explain BBGM effectiveness considering power differences and the resource intensiveness of the BBGM. The data show that even high resource intensive BBGMs can be implemented effectively if there are benefits for a powerful supplier. Cultural influences and uncertainty of the business environment also play a role. Originality/value This study develops a series of propositions indicating that Agency Theory can provide valuable guidance on how to better understand the effectiveness of BBGMs. Underlying mechanisms are identified that explain how power imbalance does not necessarily make improvement initiatives unsuccessful.

The effect of parental opportunism, IJV's autonomy and tacit knowledge on IJV instability: A comparison of multi-variate regression and fuzzy-set qualitative comparative analysis

This study uses an agency theory perspective to examine how the factors that influence principal (IJV parents) and agent (IJV) relationship may affect IJV instability in China. The study proposes a framework that bridges knowledge-based theory (of tacit knowledge) and agency theory (of parental opportunism) by incorporating reactance theory (of autonomy). By comparing the empirical results of fuzzy-set qualitative comparative analysis (fsQCA) and multiple regression analysis, using a sample of 203 Chinese-foreign IJVs, the study adds further evidence to growing methodological consideration regarding complexity theory. The results from multiple regressions show that parental opportunism and IJV's autonomy have a positive effect on IJV's instability, and that the interaction of autonomy and tacit knowledge moderates the effect of parental opportunism on IJV instability. However, fsQCA uncovers more causal paths than findings from multiple regression analysis.