Impact Of Agency Costs Research Articles

Impact of agency costs on audit quality demand in initial public offerings

Impact of agency costs on audit quality demand in initial public offerings

Impact of agency costs on audit quality demand in initial public offerings

Impact of agency costs on audit quality demand in initial public offerings

The impact of agency costs on firm performance: an analysis on BIST SME firms

The impact of agency costs on firm performance: an analysis on BIST SME firms

Equity Concentration, Agency Costs and Performance of Non-financial Firms Listed on the Saudi Stock Exchange (Tadawul)

This article examines the association between the equity concentration and agency costs as well as the impact of agency costs on performance of non-financial firms listed on the Saudi Stock Exchange (Tadawul). These relations are examined by using dynamic panel data and a two-step robust system estimation for the period 2010–2013. The study uses three proxy variables to measure agency costs. The results show that the equity concentration has no significant impact on agency costs, and the agency costs have no significant impact on firms’ performance. In addition, the study shows no evidence to support the agency theory in non-financial firms listed on the Saudi Stock Exchange (Tadawul). This study provides a better understanding of the association between equity concentration, agency costs and a firm’s performance.

Equity Concentration, Agency Costs and Performance of Non-Financial Firms Listed on the Saudi Stock Market (Tadawul)

This paper examines the association between the equity concentration and agency costs as well as the impact of agency costs on the performance of non-financial firms listed on the Saudi Stock Market (Tadawul). These relations are examined by using dynamic panel data two-steps robust system estimation for the period 2010-2013. The study uses three proxy variables to measure agency costs. The results show that the equity concentration has no significant impact on agency costs, and the agency costs have no significant impact on firms’ performance. In addition, the study shows no evidence to support the agency theory in non-financial firms listed on the Saudi Stock Market (Tadawul). This study provides a better understanding of the association between equity concentration, agency costs, and firm’s performance.

Internal Governance Characteristics, Time-Varying Agency Costs and Stock Prices

We propose that the relationship between corporate governance and equity prices operates through two distinct channels. First, at the individual firm level, strong corporate governance lowers agency costs and increases equity prices. Second, agency costs are time-varying, as manager expropriation is negatively related to the expected return on investment. This being the case, firms with strong corporate governance should outperform those with weak governance in the long-run, and this difference should be more prominent when the price of risk is high. Consistent with our proposition, and after controlling for traditional risk factors, we use a long time-series of hand-collected data to show that firms with strong internal governance characteristics have superior operating performance and generate higher returns for shareholders. This outperformance is particularly pronounced during the global financial crisis, when expected return on investment is low. Our proposition that both micro- and macro-level factors affect the relationship between corporate governance and returns provides a new framework for considering the impact of agency costs on shareholder value.

Agency Costs and Equity Mispricing

AbstractWe investigate a link between agency costs and equity mispricing. We employ comprehensive, multi‐dimensional measures of agency costs and mispricing, and find that mispricing is significantly and positively related to agency costs. We also explore the effect of equity‐based compensation on the impact of agency costs on mispricing. Our investigation extends previous studies that do not separately account for the options and restricted stock grants components of equity‐based compensation. We show that stock options, originally intended to resolve conflicts of interest, exaggerate the problem and this phenomenon is pronounced especially when firms are overvalued. Overall, our results imply that compensation packages that are not structured optimally could lead to greater mispricing.

"Regulation, Rule-of-Law, and Norms:Separating the Institutions of Investor Protection"

Viewing the arche of good corporate governance as strong minority investor protection, this paper seeks to understand how the societal institutions influence whether firms orient their governance structure towards protecting minority investors. Prior work approaching corporate governance from an agency theoretic perspective tends to operationalize institutions too simplistically, imposing the assumption that laws and the rule-of-law impact firm- level investment in investor protection equally. Furthermore, these same studies ignore the role societal norms may play in firm-level governance. Using data from 21 developed countries, I find that de facto and de jure institutions uniquely impact a firm’s corporate governance through both direct effects and by moderating the impact of agency costs on a firm’s investment in investor protection.

Agency Costs and the Price Effects of Corporate Litigation

The substantial empirical literature on corporate litigation has only recently turned its attention to the interaction between corporate governance and litigation strategy. Haslem (2005) shows that managers at defendant firms with weak governance may be too eager to settle cases in order to avoid embarrassing disclosures. This paper extends this finding by examining the impact of agency costs on plaintiff firms’ litigation decisions. I find that firms with weaker governance show significantly lower abnormal stock returns around the time they file a lawsuit. These abnormal returns likely result from firms pursuing suits with negative value. The findings suggest that managers may derive private benefits from litigating.

Vliv daní a nákladů zastoupení na dividendovou politiku

V prvni casti se clanek pokousi o vysvětleni dividendove politiky u investicnich fondů v USA, ktere investuji v oblasti nemovitosti. Takove typy investicnich fondů maji povinnost vyplacet 95% z cisteho zisku v podobě dividend. Empiricke studie vsak ukazuji mnohem větsi dividendový podil než cini tento zakonný limit. Jako možne vysvětleni se nabizi vliv nedokonalých informaci a nakladů zastoupeni. Jsou tedy představeny faktory, ktere by vliv nakladů zastoupeni na dividendovou politiku mohly vysvětlit - typ fondu, ROA, Tobinovo Q, růst aktiv, poměr dluhy/aktiva. Empiricke studie provedene autory zdrojoveho clanku dokladaji přinejmensim castecný vliv nedokonalých informaci a nakladů zastoupeni na dividendovou politiku.V dalsi casti se clanek zabýva možnostmi, jak se vyhnout zdaněni dividend pomoci dluhu a nasledne konverze dividend do kapitalových výnosů. Dodatecne zdroje ziskane z dluhu nemusi být investovane do akcii, ale mohou být použity na životni pojistěni tak, aby byla udržena hladina rizika na stejne urovni, jako před přijmutim dluhu. Existuji vsak i jine financni produkty jako stavebni spořeni nebo penzijni připojistěni, ktere mohou být take použity za ucelem sniženi rizika portfolio.

The impact of agency costs on the investment performance of Australian pension funds

This paper evaluates the overall investment performance of Australian pension funds by examining the determinants of risk-adjusted performance, and the relationship between risk, returns, and expenses. Using quarterly return data for 225 pension funds comprising 68% of total prudentially regulated pension fund assets, we find significant differences exist across fund types. On both a net return and risk-adjusted performance basis, not-for-profit funds significantly outperformed for-profit funds over the seven years to June 2002. We suggest that the performance difference is consistent with the hypothesis that agency costs in for-profit funds (due to non-representative trustee board structures and potential board member conflicts of interest) are greater than agency costs in not-for-profit funds (with representative trustee boards).

The Impact of Agency Costs on Regulator Compensation and the Size of Electric Utility Commissions

The current study examines the impact of the selection of electric utilities regulators on their compensation and the size of the regulatory commissions they lead. Much like the CEOs of regulated enterprises, managers of politically supported enterprises and bureaucracies might be expected to pursue increases in the size of administration budgets, the number of support staff and compensation packages (i.e., engage in expense preference behavior). In the case of public utility commissions, the principal-agent model used to describe private firms applies. However, within politically-appointed regulatory regimes, utilities commissioners are the agents of politicians instead of the population at large. In elected regimes, regulators are the agents of the population at large. Statistical models presented in this paper point toward greater levels of expense preference behavior (or expected utility maximization) by commissions (ers) within appointed regulatory regimes, as public choice models and models of the firm would suggest.

Clubs and the cost of agency

The paper investigates the impact of agency costs on clubmembership. Using a simple principal-agent model, under standardassumptions, the paper demonstrates that increased agency costsassociated with hidden action can lead to an expansionary bias.