Agency Costs, Corporate Governance and the Nature of Controlling Shareholders: Evidence From French Listed Firms

This paper examines the impact of internal corporate governance on agency costs for French firms from 2000 to 2015. Our results reveal that shareholders themselves are not a homogenous group since they have no single common investment horizon. We found that managerial ownership is more effective in mitigating operational expenses. However, they take advantage of excessive spending on indirect benefits. We show that board of directors does not serve as a significant deterrent to excessive discretionary expenses. Finally, we found that dividend policy is a useful tool to reduce agency conflicts by reducing cash that is available for discretionary uses.

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Determinants of Capital Structure within the Context of Corporate Governance in Egypt

International Journal of Business and Management ◽

10.5539/ijbm.v13n8p26 ◽

2018 ◽

Vol 13 (8) ◽

pp. 26 ◽

Cited By ~ 1

Author(s):

Hanaa A. El-Habashy

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Emerging Economy ◽

Managerial Ownership ◽

Listed Firms ◽

Western Countries ◽

Specific Factors ◽

The Impact ◽

The Capital Structure

This study aims to investigate the characteristics of corporate governance that impact the capital structure decisions in listed firms in Egypt, to test the efficiency of the research results conducted in the developed Western countries in an emerging economy. A sample of 240 observations from the most active non-financial companies collected in the period 2009-2014 was used for hypothesis testing. Multiple regression models (OLS) were used for data analysis. Seven variables are used in measuring the attributes of corporate governance; they are the managerial ownership, institutional shareholding, shares owned by a large block, board size, board composition, separation of CEO/Chair positions and audit type. Four ratios were calculated for measuring the capital structure, they are long-term and short-term debt to assets, total debt to assets and debt to equity. The results suggest that corporate governance attributes have a significant impact on the capital structure decisions of listed Egyptian companies. In addition, firm-specific factors such as profitability, tangibility, growth opportunities, corporate tax, firm size and non-debt tax shields influence the choice of capital structure in Egypt. The results showed the same relationship with what was obtained in developed Western countries. The paper offers some contribution in the literature and helps to understand the impact of corporate governance on Egypt's capital structure as an emerging economy.

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The impact of corporate governance on market capitalization: evidence from Bahrain bourse

Corporate Ownership and Control ◽

10.22495/cocv13i3p11 ◽

2016 ◽

Vol 13 (3) ◽

pp. 121-130 ◽

Cited By ~ 2

Author(s):

Muneer Mohamed Saeed Al Mubarak ◽

Allam Mohammed Mousa Hamdan

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Ownership Structure ◽

Fixed Effects ◽

Future Research ◽

Market Capitalization ◽

Listed Firms ◽

Econometric Methods ◽

The Impact ◽

The Relationship

Our study is based on the “Agency Theory”, as it interprets the relationship between corporate governance and market capitalization of firms listed in Bahrain Bourse (BB). Longitudinal data is used in this study from 36 listed firms in Bahrain Bourse during the period of 2009-2013. A set of econometric methods, including the fixed effects method, is used to overcome different measurement problems of such relationship. The study findings include a set of results that are related to effect of ownership structure and board of directors’ characteristics on market capitalization of firms. Based on these findings, a set of recommendations, along with study limitations and future research, are put forward.

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Controlling shareholders, performance and risk taking of Tunisian listed firms

Corporate Ownership and Control ◽

10.22495/cocv7i1c1p6 ◽

2009 ◽

Vol 7 (1) ◽

pp. 222-231

Author(s):

Taher Hamza

Keyword(s):

Corporate Governance ◽

Internal Control ◽

Ownership Structure ◽

Risk Taking ◽

Descriptive Analysis ◽

Controlling Shareholders ◽

Listed Firms ◽

Size Number ◽

Significant Difference ◽

The Impact

We investigate the effects of ownership structure, as an internal control mechanism of agency problem, on corporate governance. We focused specially on the impact of the size, number and type of blockholders on the performance and the risk-taking of the Tunisian listed companies during the period 2001-2004. The descriptive analysis highlights, absence of ownership-control discrepancy, high ownership concentration, low management stock-ownership and the presence of two or three large blockholders with significant difference of the block share size between the first and the other controlling shareholders. The main result of our study indicates that the presence of controlling shareholders affect performance and risk-taking and play an important role in corporate governance. However, we assume that the control contest of the leading shareholder is not conclusive but indicate a form of coalition and agreement effect to share private benefits.

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Impact of corporate governance on voluntary disclosure in Chinese listed companies

Corporate Ownership and Control ◽

10.22495/cocv5i2c3p5 ◽

2007 ◽

Vol 5 (2) ◽

pp. 360-366 ◽

Cited By ~ 8

Author(s):

Hongxia Li ◽

Ainian Qi

Keyword(s):

Corporate Governance ◽

Capital Structure ◽

Voluntary Disclosure ◽

Stock Options ◽

Ownership Concentration ◽

Managerial Ownership ◽

Listed Firms ◽

Chinese Listed Companies ◽

High Level ◽

The Impact

This study examines the impact of corporate governance on voluntary disclosure in 100 non-financial Chinese listed firms for the period 2003-2005. There are two main findings. (1) Firms with high Managerial ownership have high level of voluntary disclosure. If a firm has a high managerial ownership, managers are much more concerned about the benefit of shareholders and stock options will have incentives to contribute the firm. Thus, a capital structure with high managerial ownership decreases agency costs and increases the voluntary disclosure. (2) The significant correlation is identified ownership concentration with the voluntary disclosure. This is because the largest shareholders have a strong interest in firm performance and therefore a high ability to increase voluntary disclosure. Our empirical results further illustrate that big firms have inclination of voluntary disclosure through stock market and the exogenous mechanism between them is exposed

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Board governance, ownership structure and financing decisions in emerging market

Corporate Ownership and Control ◽

10.22495/cocv13i3c2p8 ◽

2016 ◽

Vol 13 (3) ◽

pp. 355-365 ◽

Cited By ~ 1

Author(s):

Md Safiullah

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Ownership Structure ◽

Emerging Market ◽

Board Governance ◽

Agency Conflicts ◽

Minority Shareholders ◽

Listed Firms ◽

Financing Decisions ◽

Agency Conflict

This paper aims to contribute to the corporate governance literature by examining the effects of board governance and ownership structure on financing decisions in an emerging country context. Using hand collected corporate governance data from a panel sample of 110 publically-listed firms in Bangladesh over 2009-2012, this study finds that the corporate debt ratio is not related to standard board of directors mechanisms.The results indicate that board of directors play little role in resolving conflicts in an environment with the presence of strong principal-principal agency conflict. The study also finds no evidence of institutional investors’ activism in a manner that is consistent with the goals of other outside stockholders due to the weak regulatory and market discipline. This empirical evidence from the principal-principal agency conflicts (conflict of interest between majority shareholders and minority shareholders) offers insights to policy makers in emerging countries interested to protect minority shareholders’ rights and to ensure effective corporate governance of capital structure decisions.

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The impact of board characteristics and ownership identity on agency costs and firm performance: UK evidence

Corporate Governance ◽

10.1108/cg-09-2016-0184 ◽

2018 ◽

Vol 18 (6) ◽

pp. 1147-1176 ◽

Cited By ~ 5

Author(s):

Bahaaeldin Samir Allam

Keyword(s):

Corporate Governance ◽

Firm Performance ◽

Agency Costs ◽

Economic Conditions ◽

Agency Conflicts ◽

Governance Mechanisms ◽

Content Type ◽

Board Characteristics ◽

Corporate Governance Mechanisms ◽

The Impact

PurposeThis paper aims to provide a twofold empirical comparison: first, a comparison between the impact of corporate governance mechanisms on agency costs proxies and firm performance measures, and second, this comparison was used before and after the 2008 financial crisis, capturing two different economic states.Design/methodology/approachPanel regression methods were applied to two data sets of non-financial firms incorporated in the FTSE ALL-Share index over the period 2005-2011.FindingsThe results provide evidence that not all mechanisms lead to lower agency conflicts and/or higher firm performance. Ownership identity has a significant impact and the role of the governance mechanisms changes with the changes in the economic conditions surrounding the firm.Research limitations/implicationsThe results lend support to the notion that forcing a certain code of practice on firms to follow could compel them to move away from conflict reduction governance structures.Originality/valueTo the best of the authors’ knowledge, this is the first paper to provide a comparison of empirical evidence for the impact of board characteristics and ownership identity on agency costs and firm performance by using a comprehensive set of corporate governance mechanisms. This comparison challenges the prior studies that use performance as an indirect proxy for lower agency costs. Additionally, it compares the impact of the governance mechanisms during two different economic conditions.

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PENGARUH GOOD CORPORATE GOVERNANCE DAN KEBIJAKAN HUTANG TERHADAP AGENCY COST

Jurnal Riset Ekonomi dan Bisnis ◽

10.26623/jreb.v12i3.1663 ◽

2019 ◽

Vol 12 (3) ◽

pp. 206

Author(s):

Febri Risliana

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Agency Costs ◽

Linear Regression Analysis ◽

Sampling Technique ◽

Institutional Ownership ◽

Agency Cost ◽

Managerial Ownership ◽

Purposive Sampling ◽

Good Corporate Governance

<div class="Section1">Penelitian ini bertujuan untuk menguji bagaimana peran good corporate governance dan kebijakan hutang terhadap agency cost. Penelitian ini menggunakan metode eksplanasi. Variabel yang diteliti adalah variabel bebas yaitu Kepemilikan Manajerial, Kepemilikan Institusional dan Ukuran Dewan Direksi, sedangkan variabel terikat adalah Agency Cost. Populasi penelitian ini adalah perusahaan yang terdaftar di Bursa Efek Indonesia, adapun teknik pengambilan sampel yang digunakan adalah purposive sampling. Teknik pengolahan dan analisis data yang digunakan adalah analisis statistik deskriptif dan analisis regresi linier berganda. Hasil penelitiah membuktikan bahwa good corporate governance yang diproksi dengan kepemilikan manajerial, kepemilikan institusi dan ukuran dewan direksi berpengaruh terhadap agency cost. Kebijakan hutang yang diproksi dengan debt to equity ratio berpengaruh terhadap agency cost.This study aims to examine how the role of good corporate governance and debt policy towards agency costs. This research uses the explanation method. The variables studied were independent variables namely Managerial Ownership, Institutional Ownership and Board of Directors Size, while the dependent variable was Agency Costs. The population of this study is companies listed on the Indonesia Stock Exchange, while the sampling technique used is purposive sampling. Data processing and analysis techniques used are descriptive statistical analysis and multiple linear regression analysis. The results of the study prove that good corporate governance which is proxied by managerial ownership, institutional ownership and the size of the board of directors influences agency costs. Debt policies which are proxied by the ratio of debt to capital affect agency costs.<pre> </pre></div>

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Corporate Governance and Agency Cost: Empirical Evidence from Vietnam

Journal of Risk and Financial Management ◽

10.3390/jrfm13050103 ◽

2020 ◽

Vol 13 (5) ◽

pp. 103 ◽

Cited By ~ 1

Author(s):

Anh Huu Nguyen ◽

Duong Thuy Doan ◽

Linh Ha Nguyen

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Agency Costs ◽

Fixed Effects ◽

Wide Spectrum ◽

Ordinary Least Squares ◽

Agency Cost ◽

Fixed Effects Model ◽

Board Characteristics ◽

The Impact

This study examines the impact of corporate governance, reflecting a wide spectrum of board characteristics and ownership structure on agency costs in 281 listed companies on Ho Chi Minh Stock Exchange (HOSE) in Vietnam in the period 2013–2018. For this purpose, three board characteristics were chosen: (1) the size of board of directors, (2) equilibrium between non-executive and executive members of the board of directors, (3) the CEO chair duality and three types of ownership structures were chosen: (1) management ownership, (2) government ownership, (3) foreign ownership. An inverse proxy of agency costs is used: asset utilization ratio (asset turnover), which reflects the managerial efficiency. The research methodology includes three statistical approaches: Ordinary least squares (OLS), fixed effects model (FEM) and random effects model (REM) are considered to employ to address econometric issues and to improve the accuracy of the regression coefficients. The results can create effective corporate governance mechanisms in controlling the managerial opportunistic behavior to lower agency conflicts, and hence lower agency costs.

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Relationship between Code of Corporate Governance and Corporate Financial Performance (An Empirical Study of Food Companies Listed on KSE)

GIS Business ◽

10.26643/gis.v12i4.3349 ◽

2017 ◽

Vol 12 (4) ◽

pp. 01-09

Author(s):

Asma Rafique Chughtai ◽

Afifa Naseer ◽

Asma Hassan

Keyword(s):

Corporate Governance ◽

Stock Exchange ◽

Securities And Exchange Commission ◽

Executive Directors ◽

Agency Conflicts ◽

Cross Sectional ◽

Return On Equity ◽

Governance Practices ◽

Code Of Corporate Governance ◽

The Impact

The crucial role that implementation of Code of Corporate Governance plays on protecting the rights of minorities, shareholders, local as well as foreign investors cannot be denied. Companies all over the world are required to implement their respective Code of Corporate Governance for avoiding agency conflicts between companies management and stakeholders and for assuring transparency in accountability. This paper aims at exploring the impact of implementation of corporate governance practices (designed by Securities and Exchange Commission of Pakistan) have on the financial position of companies. For explanatory variables of the study, composition of the board as per the Code of Corporate Governance that comprises of presence of independent, executive and non-executive directors has been taken into consideration. Return on equity has been taken as an indicator of firms profitability i.e. the dependent variable. For this study, companies listed on food producing sector of Karachi Stock Exchange have been screened for excogitation of the relationship. It is an empirical research based on nine years data from 2007–2015. Using Hausman Test for selecting the data analysis technique between Fixed or Random, Fixed Cross Sectional Panel Analysis has been used for analysis of the data collected. Findings indicate that presence of independent, executive and non-executive directors as per the code requirements levies a significant impact on the profitability of companies indicated by return on equity. It is, thus concluded that companies should ensure compliance with code of governance practices to reduce not only the agency issues but also to increase their profitability.

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Pengaruh Dewan Direksi, Dewan Komisaris Independen. Kepemilikan Manajerial, Kepemilikan Institusional, Dan Dewan Pengawas Syariah Terhadap No Performing Financing (Studi Kasus Pada Bank Umum Syariah Yang Terdaftar Di OJK Periode 2015-2019)

Ratio : Reviu Akuntansi Kontemporer Indonesia ◽

10.30595/ratio.v2i2.10378 ◽

2021 ◽

Vol 2 (2) ◽

Author(s):

Yugi Maheswari ES ◽

Iwan Fakhruddin ◽

Azmi Fitriati ◽

Bima Cinintya Pratama

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Commercial Bank ◽

Financial Services ◽

Supervisory Board ◽

Secondary Data ◽

Institutional Ownership ◽

Managerial Ownership ◽

Good Corporate Governance ◽

The Board Of Directors

Tujuan penelitian ini untuk mengetahui pengaruh penerapan Good Corporate Governance (GCG) yang diproksikan oleh dewan direksi, dewan komisaris independen, kepemilikan manajerial, kepemilikan institusional, dan dewan pengawas syariah terhadap risiko pembayaran yang diukur dengan rasio Non Performing Financing (NPF) pada Bank Umum Syariah. Populasi penelitian adalah Bank Umum Syariah Yang Terdaftar di Otoritas Jasa Keuangan. Data yang digunakan adalah data sekunder berupa laporan tahunan Bank Umum Syariah periode 2015-2019. Sampel yang dikumpulkan adalah 14 bank syariah sebayak 70 data. Hasil penelitian menunjukkan bahwa dewan direksi berpengaruh negative erhadap NPF. Dewan komisaris independen, kepemilikan manajerial, kepemilikan institusional, dan dewan pengawas syariah tidak berpengaruh terhadap NPF. The purpose of this study is to determine the effect of the implementation of Good Corporate Governance (GCG) which is proxied by the board of directors, the board of independent commissioners, managerial ownership, institutional ownership, and the sharia supervisory board against payment risk as measured by the Non Performing Financing (NPF) ratio at the Bank Sharia General. The study population was a Sharia Commercial Bank Registered at Financial services Authority. The data used was secondary data in the form of reports annual Sharia Commercial Bank for the period 2015-2019. The samples collected were 14 Islamic banks as much as 70 data. The results showed that the board of directors has a negative effect on NPF. Independent board of commissioners, managerial ownership, institutional ownership, and sharia supervisory board have no effect on NPF.

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