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 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.

scholarly journals Earnings management, directors’ discretions and information content affecting discretionary accruals of Malaysian publicly listed companies

2014 ◽  
Vol 11 (4) ◽  
pp. 625-634
Author(s):  
Yap Voon Choong ◽  
Kok Thim Chan ◽  
John Stanley Murugeshu
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Stock Exchange ◽  
Explanatory Power ◽  
Discretionary Accruals ◽  
Agency Cost ◽  
Share Price ◽  
Future Earnings ◽  
Financial Variables ◽  
Political Costs

Managers have reporting discretion permitted by accounting standards over a combination of earnings management choices. The objective of this study is to identify the types of discretionary accounting choices that are indicative of earnings management. Based on a sample of 947 companies listed on the Malaysian stock exchange, the results indicate that a number of firm specific financial variables that proxy for agency cost, political costs and information asymmetry capture discretionary accruals behaviour. This study also seeks to examine the explanatory power of the earnings management in predicting future earnings and firm value. The results indicate that discretionary accruals can improve the informativeness of a firm’s current and past earnings when predicting future earnings and share price

scholarly journals Investigating the Effects of Dividends Pay-out on Stock Prices and Traded Equity Volumes of BSE Listed Firms

2015 ◽  
Vol 1 (4) ◽  
pp. 24-37 ◽  
Author(s):  
Ishmael Radikoko ◽  
Emmanuel Ndjadingwe
Keyword(s):  
Stock Prices ◽  
Firm Value ◽  
Stock Price ◽  
Direct Relationship ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Optimal Time ◽  
Listed Firms ◽  
Year Effect ◽  
Quota Sampling

The main objective of this study is to examine the effect of dividend pay-out on the prices of stock in Botswana’s equity market as well as the effect of traded volumes of such stocks. Other objectives of the research are to determine the optimal pay-out ratio based on the profits of the firm and to determine the optimal time to declare and pay dividends. We use quota-sampling technique and selected 5 companies from the 22 domestic listed companies in the Botswana Stock Exchange. The companies under consideration are Barclay Bank, RDCP, Chobe, Engen and Sefalana Plcs. These companies are chosen based on the availability of daily closing trading information for the past five years and easiness to get information to use for our study that includes dividends pay-outs, profits made, volumes traded, etc. The result of this study reveals that there is a direct relationship between dividend announcement, ex-dividends, dividend pay-out ratio and volume of stock traded and the stock price in Botswana. Furthermore, the study concludes that there is a direct relationship between change in dividends and change in dividend per share. Lastly, the finding reveals that most of the companies sampled pay dividends between December and March. We recommend that companies should have an optimal dividend policy as this have been proven to increase firm value. We also recommend that firms should announce dividends around December to March to counter the end of year effect that usually suppresses stock prices.

scholarly journals Voluntary Human Capital Disclosure and Firm Value Relationship in the Listed Companies of Bangladesh: A Conceptual Overview

2020 ◽  
Vol 5 (2) ◽  
pp. 39
Author(s):  
Shamem Ara Mili ◽  
Fathyah Hashim
Keyword(s):  
Human Capital ◽  
Firm Value ◽  
Stock Exchange ◽  
Agency Conflicts ◽  
Listed Firms ◽  
Reporting Practices ◽  
Corporate Reporting ◽  
Relationship Of ◽  
The Relationship ◽  
Conceptual Overview

The aim of this paper is to incorporate relevant empirical researches and literature for extending the potentials of voluntary human capital disclosure to increase the value of the listed firms in Bangladesh. Voluntary human capital disclosure reduces information asymmetry and increases the financial lucidity of the business, and hence, could minimize agency conflicts, and satisfy employees’ and other stakeholders’ of the business. However, subsequent to a 13.8 percent drop in 2018, the broad index of the Dhaka Stock Exchange Limited lost 17.3 percent in 2019. It is among the first paper focusing on the consequence of voluntary human capital disclosures on firm value from a combination of agency theory, signaling theory, and stakeholder theory perspective. Moreover, extant literature endow with inconsistent and less evidence concerning the relationship of voluntary human capital disclosure with firm value. The present paper proposes and illustrates potential proposition for future empirical investigation in the context of an emerging economy like Bangladesh. It is also expected that the present paper would endow with further knowledge to investors, managers, and other stakeholders to upgrade firm value by means of voluntary human capital disclosure in their corporate reporting practices.

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 Corporate governance and corporate social responsibility synergies: evidence from New Zealand

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rashid Zaman ◽  
Muhammad Nadeem ◽  
Mariela Carvajal
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
New Zealand ◽  
Social Responsibility ◽  
Stock Exchange ◽  
Business Practices ◽  
Content Type ◽  
Listed Firms ◽  
Responsible Business Practices ◽  
Corporate Social

Purpose This paper aims to provide exploratory evidence on corporate governance (CG) and corporate social responsibility (CSR) interfaces. Although there remains a voluminous literature on CG and CSR, very little effort has been put forward to explore the nature of this relationship. Design/methodology/approach Using interviews with Senior Executives of New Zealand Stock Exchange listed firms, this research assesses CG and CSR practices, identifies barriers for CG and CSR adoption and investigates the nature of the relationship between CG and CSR. Findings The results indicate a moderate level of CG and CSR practices, with a lack of resources and cost-time balance as common barriers for CG and CSR adoption. However, despite these barriers, we note that the majority of executives appreciate the increasing convergence between CG and CSR, and believe that a more robust CG framework will lead to more sustainable CSR practices. Originality/value These findings have important implications for managers and policymakers interested in understanding the CG-CSR nexus and promoting responsible business practices.

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 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 The Effect of Financial Performance and Innovation on Leverage: Evidence from Indonesian Food and Beverage Sector

2020 ◽  
Vol 11 (22) ◽  
pp. 367-388
Author(s):  
Perdana Wahyu Santosa
Keyword(s):  
Firm Size ◽  
Firm Value ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Agency Cost ◽  
Debt Ratio ◽  
Food And Beverage ◽  
Innovation And Technology ◽  
Managerial Implications ◽  
Research Criteria

This article aims to investigate the determinants of firm’s capital structure (debt ratio) such as asset structure, profitability, agency cost, innovation and technology, and firm size as a moderating variable. This study used quarterly data from the financial statements of food and beverage firms at the Indonesia Stock Exchange with a purposive sampling method that met the research criteria with panel data analysis. The findings show that firm size and asset structure affect leverage positively; however, profitability and innovation and technology negatively affect the debt ratio, while agency cost does not affect leverage. All findings are in line with the hypotheses except agency cost. The firm size as a moderating variable shows strengthening of the interaction between agency cost and innovation with leverage. However, interacting with firm size weakens the effect of the relationship between assets structure and profitability with the debt ratio. Managerial implications of the target of debt ratio that creates the value of the firm need to be flexible and controlled by the interaction of the firm size with firm characteristics and innovation to achieve an optimal firm value of F & B sector.

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