scholarly journals Analyzing the Link Between Agency Problems, Governance and Control Attributes for Pakistan

e-Finanse ◽  
2017 ◽  
Vol 13 (3) ◽  
pp. 43-65 ◽  
Author(s):  
Ahmad Ghazali ◽  
Ahmad Raza Bilal
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Agency Costs ◽  
Stock Exchange ◽  
Agency Problems ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Listed Firms ◽  
Utilization Ratio ◽  
Sound Policy

AbstractThis research attempts to analyze the relationship between agency, control and corporate governance attributes for a sample of 267 firms listed on the Pakistan Stock Exchange (PSX) from 2005 to 2008. The results show that a) Pakistani listed firms are facing high agency costs problems in contrast to established markets. b) Factors are observed important to having strong effect on mitigating agency costs levels: corporate dividend policy, degree of board independence, and institutional ownership. c) Corporate governance factors reduce discretionary expenditure ratio, increase assets utilization ratio and free cash flow ratio. d) Control variables increases the asset utilization ratio and decreases the free cash flow and increases the managers’ performance (Tobin’s Q ratio). e) Ownership attributes regulate free cash flow and decrease the discretionary expenditure ratio. The outcomes of this research lead to the proposed use of recommended governance, control and ownership attributes to overcome agency problems and a sound policy for better corporate governance (better management of agency cost issues) for listed firms.

Agency Cost and Dividend Pay-out: A Study of Selected Listed Manufacturing Firms in Nigeria

2018 ◽  
Vol 1 (1) ◽  
pp. 42 ◽  
Author(s):  
Helen Obiageli Anazonwu ◽  
Francis Chinedu Egbunike ◽  
Felix Nwaolisa Echekoba
Keyword(s):  
Cash Flow ◽  
Agency Costs ◽  
Stock Exchange ◽  
Agency Cost ◽  
Manufacturing Firms ◽  
Free Cash Flow ◽  
Dividend Payments ◽  
Negative Effect ◽  
Cost Studies ◽  
Positive Effect

Agency cost is an internal cost which arises between management (agent) and shareholder (principal), because of the diverging interest of the two parties. Dividend payments are often employed to mitigate this cost. Studies have examined the effect of dividend pay-outs on agency costs documenting mixed findings. However, the literature on the reverse effect of agency costs on dividend pay-outs is still nascent. The main objective of the study is to examine the effect of agency cost on dividend pay-out of listed manufacturing firms in Nigeria. The study used a panel research design. The population of the study comprised listed manufacturing firms, but delimited to firms in conglomerate and consumer goods sectors of the Nigerian Stock Exchange. Data for the study were collected from yearly financial statements of the selected firms. The hypotheses were tested using pooled OLS Regression. The dependent variable of the study was dividend pay-out, while assets to sales ratio, leverage, and free cash flow were proxies of agency cost. Firm size and profitability measures (ROA and ROE) were used as control variables in the study. The study found a significant and positive effect of assets to sales ratio and free cash flow, and a significant and negative effect of leverage on dividend pay-out. The study recommended amongst others that, managers should consider the implication of agency costs in the design of in the design and implementation of a dividend policy.

scholarly journals Agency Cost dan Kebijakan Dividen (Studi pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia)

2021 ◽  
Vol 7 (1) ◽  
pp. 33-41
Author(s):  
Elliv Hidayatul Lailiyah ◽  
Muhammad Dzikri Abadi
Keyword(s):  
Cash Flow ◽  
Large Scale ◽  
Stock Exchange ◽  
Agency Problems ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Annual Reports ◽  
Manufacturing Companies ◽  
Insider Ownership ◽  
Operational Activities

Manufacturing companies in Indonesia are large-scale companies and dominate the Indonesia Stock Exchange. The number of companies listed on the stock exchange is increase every year, which results in more people having the opportunity to own a company. The spread of more investors who own the company makes conflict between owners even higher. The purpose of this study is to determine the effect of agency cost proxied by insider ownership, dispersion of ownership, free cash flow, and collateralizable assets on dividend policies of manufacturing companies in Indonesia. Data in the form of secondary data in the form of financial reports and annual reports for the period 2012-2019. The data used multiple linear regression statistical analysis techniques. The results of this study show that agency cost, which is proxied by dispersion ownership, free cash flow and collateralizable assets, has a positive effect on dividend policy. A  firm in its operational activities, carries out agency relationships. Agency problems arise when an agent acts not in accordance with the principal's interests, which causes a conflict of interest between the principal and agent. Agency problems will increase agency cost. The agency problem can be reduced by the dividend payment mechanism, namely by increasing the proportion of dividend payments from company profits for stockholders. In contrast to insider ownership which does not affect dividend decisions because the percentage of company ownership owned by insiders is limited in Indonesia.

Corporate governance and dividend policy in Sri Lankan firms: a data triangulation approach

2020 ◽  
Vol 12 (4) ◽  
pp. 543-560
Author(s):  
H. Kent Baker ◽  
Narayanage Jayantha Dewasiri ◽  
Sandaram P. Premaratne ◽  
Weerakoon Yatiwelle Koralalage
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Sri Lankan ◽  
Survey Analysis ◽  
Data Set ◽  
Market Data ◽  
Content Type

Purpose This paper aims to investigate the relation between corporate governance and dividend policy in Sri Lankan firms. Design/methodology/approach The data set consists of market data using 1,608 firm-year observations from 201 firms listed on the Colombo Stock Exchange and survey-based data from 151 respondents from the same 201 firms. The authors use data triangulation to examine the two approaches. Findings The analysis of the market data reveals that a significantly positive relation between corporate governance on both the propensity to pay dividends and dividend payout. Survey analysis confirms these findings. Triangulated evidence supports the outcome model of dividends, free cash flow and agency cost theories. Practical implications The findings are useful not only for management in developing suitable corporate governance practices and dividend policies for their firms but also for shareholders in evaluating both existing and new investments. Future researchers should investigate the same phenomenon in other contexts using triangulation approaches to confirm their findings. Originality/value This study is the first to use governance indices both in terms of survey and market-based data to examine the relation between corporate governance and dividend policy.

The Agency Cost Effects of Unionization on Firm Value

2008 ◽  
Vol 20 (1) ◽  
pp. 133-152 ◽  
Author(s):  
Vic Naiker ◽  
Farshid Navissi ◽  
VG Sridharan
Keyword(s):  
New Zealand ◽  
Firm Value ◽  
Agency Costs ◽  
Stock Exchange ◽  
Agency Cost ◽  
Labor Intensity ◽  
Listed Firms ◽  
Industry Membership

ABSTRACT: Using a sample of 99 New Zealand stock-exchange-listed firms we employ agency framework and strategy typology to examine whether introduction of unionization legislation affects value of prospector firms more negatively than defender firms. The results from this examination indicate that firms characterized by strategy of higher Growth-Diversity and Innovation-Risk (prospector firms) experience greater loss in value. We attribute the results to the higher agency costs associated with the strategies adopted by prospector firms. The results hold after controlling for variables such as size, industry membership, labor intensity, and proportion of unionized workers.

scholarly journals Institutional investors’ response to improved corporate governance: Evidence from the brazilian capital market

2018 ◽  
Vol 64 (4) ◽  
pp. 135
Author(s):  
Eduardo Schiehll ◽  
Melissa Gerhard ◽  
Clea Beatriz Macagnan
Keyword(s):  
Corporate Governance ◽  
Capital Market ◽  
Institutional Investors ◽  
Stock Exchange ◽  
Emerging Market ◽  
Agency Cost ◽  
Data Set ◽  
Listed Firms ◽  
Internal Governance Mechanisms ◽  
Governance Quality

<p>This study examines whether normative pressures from stock market regulators to improve the governance quality of Brazilian listed firms influence the participation and activism of institutional investors. More specifically, we investigate the association between institutional investor’s ownership and firm’s voluntary adhesion to the São Paulo Stock Exchange (B3) differentiated levels of corporate governance quality. Empirical testing is performed on a ten-year (2002–2011) panel data set from a sample of 439 firms listed on the B3. Our findings suggest that firms in differentiated corporate governance levels, that is, with better level of transparency and commitment to monitoring, are more attractive to institutional investors. We interpret this result as evidence supporting the shareholder activism movement, attributed by several scholars to institutional shareholders. Our study contributes to the governance literature on the firm’s response to normative pressures and the ability of internal governance mechanisms to signal lower agency cost to capital market. Our evidence also contributes to the ongoing discussion about the role and influence of institutional investors in the functioning of capital markets, and more specific in emerging market like Brazil.</p>

scholarly journals Do Cross-Listed Firms Have a Better Governance Structure and Lower Agency Costs? Evidence from Chinese Firms

2021 ◽  
Vol 13 (4) ◽  
pp. 1734
Author(s):  
Dong-Soon Kim ◽  
Eunjung Yeo ◽  
Li Zhang
Keyword(s):  
Corporate Governance ◽  
Agency Costs ◽  
Fixed Effects ◽  
Stock Exchange ◽  
Governance Structure ◽  
Least Square ◽  
Board Size ◽  
Chinese Firms ◽  
Listed Firms ◽  
Cross Listing

This study examines whether an influence from a difference in corporate governance structure exists on firms’ agency costs between Chinese companies cross-listed on the Hong Kong Stock Exchange (HKSE) and those that are domestically listed ones. We determine that, overall, companies with an HKSE cross-listing had better corporate governance than those without. The corporate governance advantage of the HKSE cross-listed firms holds if we control for firm fixed effects and resolve the potential endogeneity problem between corporate governance and agency costs by using two-stage least square (2SLS) regression analysis with instrumental variables. Specifically, the HKSE cross-listed firms had better corporate governance in terms of board size and institutional ownership. By contrast, domestically listed firms experienced the adverse effects of institutional owner’s roles and higher board pay. The advantages of HKSE cross-listed firms may stem from the benefits of having a larger board size and the effective monitoring of the management by the institutional stockholders. Implications are drawn for the debate on cross-listing and the future challenges of Chinese firms, and a more robust monitoring is necessary for sustainable finance of their stock markets.

scholarly journals PENGARUH FREE CASH FLOW DAN FINANCIAL LEVERAGE TERHADAP MANAJEMEN LABA DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI VARIABEL MODERASI

SIMAK ◽  
2020 ◽  
Vol 18 (02) ◽  
pp. 118-134
Author(s):  
Jihana Safira Tualeka ◽  
Tenriwaru Tenriwaru ◽  
Ummu Kalsum
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Cash Flow ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Free Cash Flow ◽  
Financial Leverage ◽  
Purposive Sampling ◽  
Good Corporate Governance

This research aimed to examine whether free cash flow and financial leverage affected profit management and whether good corporate governance as a moderating variable moderated the effect of free cash flow and financial leverage on profit management on textile and garment companies listed on the Indonesia Stock Exchange in the period 2016-2018. This study used sample of 16 companies from the textile and garment listed on the Indonesia Stock Exchange for the period of 2016-2018, and used a purposive sampling technique. Based on the results of research conduct shows that free cash flow has a negative and significant effect on earnings management. Financial leverage has a negative and not significant effect on earnings management. Good corporate governance can moderate or strengthen the influence between free cash flow and profit management. And good corporate governance can moderate or strengthen the influence between financial leverage and profit management.

scholarly journals Does corporate governance affect dividend policy: Evidence from ASEAN emerging market

2015 ◽  
Vol 5 (1) ◽  
pp. 88-94 ◽  
Author(s):  
Gatot Nazir Ahmad
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Empirical Model ◽  
Stock Exchange ◽  
Emerging Market ◽  
Research Work ◽  
Free Cash Flow ◽  
Positive Sign ◽  
Good Corporate Governance ◽  
Governance Practices

This research-work uses a survey which comes from three different countries in ASEAN region i.e Indonesian, Thailand and Malaysian. This work integrate whole data from above all countries to examine whether firms that do corporate governance practising will pay higher dividends. This study has two issues: how regulation of stock exchange affects good corporate governance and how corporate governance affects value of the firm. Using OLS regression, our finding shows that good corporate governance practices has positive sign to dividend payout. Our finding may contribute to corporate governance literature. First, result finding support Jensen’s (1986) that states free cash flow not reduce dividends pay out. Second, integrating empirical model from three different countries in ASEAN region.

scholarly journals The Influence of Asset Structure, Capital Structure, Risk Management and Good Corporate Governance on Financial Performance and Value of The Firm through Earnings and Free Cash Flow As An Intervening Variable in Banking Companies Listed in Indonesia Stock Exchange

2017 ◽  
Vol 12 (8) ◽  
pp. 249 ◽  
Author(s):  
Catur F. Ukhriyawati ◽  
Tri Ratnawati ◽  
Slamet Riyadi
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Capital Structure ◽  
Financial Performance ◽  
Cash Flow ◽  
Stock Exchange ◽  
Free Cash Flow ◽  
Partial Least Square ◽  
Least Square ◽  
Good Corporate Governance

Banking companies that have gone public has the goal of increasing prosperity of the owners or shareholders by increasing the value of the company. The value of the company is very important because of the high value of the company which will be followed by a high prosperity shareholders. This study aimed to analyze the influence of asset structure, capital structure, risk management and good corporate governance on financial performance and value of the firm through earnings and free cash flow as an intervening variable in banking companies listed in Indonesia Stock Exchange. Data analysis techniques use Partial Least Square (PLS) and from data processing and hypothesis testing, produced 13 accepted hypothesis and 8 hypothesis is rejected. The results of this study were (1) asset structure influence positive and significantly to earnings, (2)  capital structure influence negative and significantly to earnings, (3) risk management influence positive and no significantly to earnings, (4) Good Corporate Governance influence positive and significantly to earnings, (5) asset structure influence positive and significantly to free cash flow, (6) capital structure influence positive and no significantly to free cash flow, (7) risk management influence negative and no significantly to free cash flow, (8) Good Corporate Governance influence positive and no significantly to free cash flow, (9) asset structure influence negative and no significantly to financial performance, (10) capital structure influence negative and significantly to financial performance, (11) risk management influence positive and no significantly to financial performance, (12) Good Corporate Governance influence positive and significantly to financial performance, (13) asset structure influence positive and significantly to value of the firm, (14) capital structure influence positive and no significantly to value of the firm, (15) risk management influence negative and significantly to value of the firm, (16 ) Good Corporate Governance influence positive and significantly to value of the firm, (17) earnings influence positive and significantly to financial performance, (18) free cash flow influence positive and significantly to financial performance, (19) earnings influence positive and significantly to value of the firm, (20) free cash flow influence positive and no significantly to value of the firm and (21) financial performance influence positive and significantly to value of the firm.

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