AGENCY PROBLEMS AND DEBT FINANCING

The effects of corporate governance on capital structure in Taiwanese corporations after controlling for the heterogeneity of industries and firm size

Corporate Ownership and Control ◽

10.22495/cocv6i1c1p3 ◽

2008 ◽

Vol 6 (Special Issue 1) ◽

pp. 35-47

Author(s):

Lie-Huey Wang ◽

Hsien-Chang Kuo

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Board Of Directors ◽

Cash Flow ◽

Agency Problems ◽

Voting Rights ◽

Debt Financing ◽

The Board Of Directors ◽

Seat Control ◽

Cash Flow Rights

Since the MM theory, scholars have discussed capital structure issues from the perspectives of agency problems in corporate governance. Corporate governance has been seen as the means to reducing the agency costs produced by aligning the interests of management and shareholders, and the incentive for the management to engage in opportunistic behavior has been influenced by the firm’s ownership and board of director structures. Previous studies, however, focus on traditional financial factors and neglect the debt and equity agency problems triggered by corporate governance and their possible influences on capital structure decisions. The sample used in this study consists of 317 firms listed on the Taiwan Stock Exchange from 1998 to 2007. By controlling for the heterogeneity of industries and firm size, our models incorporate the cash flow rights-voting rights-seat control divergence, the ownership structure, and the structure of the board of directors to examine the effects of corporate governance on the firm’s capital structure. The results show that, when the divergence between cash flow rights and seat control is lower or when the divergence between voting rights and seat control is higher, the controlling shareholders can either control the board of directors to better monitor the firm or exhibit a preference for debt financing based on entrenchment motives. Further analysis indicates that blockholders prefer lower debt financing and do not expropriate minority shareholders. Financial institutional shareholders function through their provision of monitoring and the certification of debt for technological firms and can decrease the firms’ debts. The management in the technological industry firms prefers debt financing in order to obtain agency-related benefits. While directors in traditional industries or large firms might use personal or firm debt to tunnel the firm’s assets, the function of independent directors in technological firms or large firms of lowering debts in order to reduce the firm’s bankruptcy risks is more evident.

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An Equilibrium Analysis of Debt Financing under Costly Tax Arbitrage and Agency Problems

The Journal of Finance ◽

10.1111/j.1540-6261.1981.tb00645.x ◽

1981 ◽

Vol 36 (3) ◽

pp. 569-581 ◽

Cited By ~ 49

Author(s):

AMIR BARNEA ◽

ROBERT A. HAUGEN ◽

LEMMA W. SENBET

Keyword(s):

Agency Problems ◽

Debt Financing ◽

Equilibrium Analysis ◽

Tax Arbitrage

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Agency problems and debt financing: leadership structure effects

Corporate Governance ◽

10.1108/14720700410521943 ◽

2004 ◽

Vol 4 (1) ◽

pp. 31-38 ◽

Cited By ~ 43

Author(s):

Richard H. Fosberg

Keyword(s):

Agency Problems ◽

Debt Financing ◽

Leadership Structure

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Our Debts Heavy... (on the Monograph “Debt as a Phenomenon of the XXI Century”)

Voprosy Ekonomiki ◽

10.32609/0042-8736-2015-4-152-159 ◽

2015 ◽

pp. 152-159 ◽

Cited By ~ 2

Author(s):

T. Leonova

Keyword(s):

European Union ◽

Economic Development ◽

Global Economy ◽

Debt Financing ◽

The European Union ◽

National Economies

Lending capital, credit and debt financing have been around and used to fuel economic development since the time immemorial. There are innumerable studies by international and Russian scholars that look into the evolution of these notions and lending instruments employed. The collective monograph edited by A. Porokhovsky and published by the MSU in 2014 intends to provide an all-around political and economic as well as applied review of the current debt issues faced by the global economy, national economies of Russia, U.S.A. and countries of the European Union. It uses a variety of academic and methodological postulates that range from the reproduction approach to modern macroeconomic doctrines.

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AGENCY PROBLEM DALAM PENERAPAN PEMBIAYAAN AKAD MUDHARABAH PADA PERBANKAN SYARIAH

ALQALAM ◽

10.32678/alqalam.v33i1.384 ◽

2016 ◽

Vol 33 (1) ◽

pp. 46

Author(s):

Aswadi Lubis

Keyword(s):

High Risk ◽

Asymmetric Information ◽

Human Resources ◽

Moral Hazard ◽

Adverse Selection ◽

Agency Problem ◽

Agency Problems ◽

Islamic Banking ◽

The Public

The purpose of writing this article is to describe the agency problems that arise in the application of the financing with mudharabah on Islamic banking. In this article the author describes the use of the theory of financing, asymetri information, agency problems inside of financing. The conclusion of this article is that the financing is asymmetric information problems will arise, both adverse selection and moral hazard. The high risk of prospective managers (mudharib) for their moral hazard and lack of readiness of human resources in Islamic banking is among the factors that make the composition of the distribution of funds to the public more in the form of financing. The limitations that can be done to optimize this financing is among other things; owners of capital supervision (monitoring) and the customers themselves place restrictions on its actions (bonding).

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