scholarly journals The Agency Problem, Corporate Governance, and the Asymmetrical Behavior of Selling, General, and Administrative Costs

2011 ◽  
Author(s):  
Clara Xiaoling Chen ◽  
Hai Lu ◽  
Theodore Sougiannis
Keyword(s):  
Corporate Governance ◽  
Agency Problem ◽  
Administrative Costs

scholarly journals Family companies and the costs of governance mechanisms: A discriminant analysis for a sample of Algerian companies

2018 ◽  
Vol 2 (1) ◽  
pp. 51-71
Author(s):  
Mohamed Cherif BENZOUAI
Keyword(s):  
Corporate Governance ◽  
Discriminant Analysis ◽  
Discriminant Function ◽  
Lower Cost ◽  
Agency Problem ◽  
Governance Structure ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
The Family

This paper aims at shedding light on the importance of corporate governance mechanisms costs when considering the decision of adoption of those mechanisms by companies, by relying on the discriminant analysis of a sample of 112 Algerian unlisted companies. The special nature of the agency problem in family companies allows it to adopt a different and lower cost governance structure than other companies. The study found that the variables that reflect corporate governance mechanisms have a significant effect in the discriminant function between the family companies and the rest of the companies.

scholarly journals The corporate uses of debt

1995 ◽  
Vol 26 (3) ◽  
pp. 90-96 ◽  
Author(s):  
Sinclair Davidson ◽  
Laurence Rapp
Keyword(s):  
Corporate Governance ◽  
South African ◽  
Agency Problem ◽  
The South ◽  
Corporate Environment ◽  
Present Evidence

In this article we consider the use of debt by South African firms. There are two possible uses of debt: firstly, it is a method of raising finance and secondly, a method of corporate governance. Within the South African corporate environment it is not clear whether firms would use debt for both or either of these purposes. We are unable to find evidence in favour of Modigliani and Miller's proposition one or proposition two. It appears that firms do not use debt for corporate governance purposes and we present evidence that there could be an agency problem inherent within the structure of South African business.

Corporate governance mechanisms and corporate investments: evidence from India

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samridhi Suman ◽  
Shveta Singh
Keyword(s):  
Corporate Governance ◽  
Dynamic Model ◽  
Capital Expenditure ◽  
Agency Problem ◽  
Agency Problems ◽  
Static Model ◽  
Capital Expenditures ◽  
Content Type ◽  
Empire Building ◽  
The Impact

PurposeThe purpose of this paper is to empirically investigate the influence of corporate governance variables relating to the board of directors, audit and ownership on the agency problems that inflict a firm's investments in capital and research and development (R&D) expenditures. This study posits that the R&D investments are inflicted by the agency problem of “quiet life” whereas “empire-building” agency problem affects capital expenditure decisions.Design/methodology/ approachThis study analyses the investment behaviour of non-financial and non-utility firms listed on NIFTY 200 from FY 2009 to FY 2018 using a static and dynamic model.FindingsThe results from the static model suggest that ownership concentration mitigates the agency problem of the “quiet life” that affects R&D expenditures. However, no corporate governance attribute has a significant impact on R&D investments under the assumption of the dynamic model. In respect of capital expenditures, the analysis of static model yields that audits by large auditor firms and usage of non-audit services ameliorate the agency problem of “empire-building”. The results from the dynamic model show that independent boards worsen it. They also continue to provide empirical evidence in favour of large auditors.Originality/valueThis paper contributes to the literature on the corporate governance-investment association by simultaneously examining the impact of multiple corporate governance attributes on the agency problems of “quiet life” and “empire-building” that affect R&D and capital expenditures, respectively, in a static and dynamic context for a sample of Indian firms.

scholarly journals Analisis Kualitas Laba Perbankan Syariah di Indonesia

Al-Muzara ah ◽  
2021 ◽  
Vol 9 (1) ◽  
pp. 71-83
Author(s):  
Riko Adimulya ◽  
Hartoyo ◽  
Imam Teguh Saptono
Keyword(s):  
Corporate Governance ◽  
Management Practice ◽  
Earnings Quality ◽  
Agency Problem ◽  
Earning Management ◽  
Financial Report ◽  
Debt Covenant ◽  
Cash Basis ◽  
Bonus Plan

The firms tend to perform earning management, mainly due to there was an agency problem amongst the management (agent) and the owner (principal), in more specifically because the lack of corporate governance, manager’s bonus plan, decreasing of supervision, debt-covenant, and economic-meltdown condition. The earning management practice is potentially done by any firms included the sharia bank. The earning management practice will affect the firm’s earnings quality as represented in the financial report. Despite the accounting treatment of mudharabah-musyarakah financing uses cash-basis, the sharia bank may manipulate the earnings when they determine the profit from the investments which will be shared to both the bank and investor. The study aims to investigate the differences of earnings quality and examine the effect of mudharabah-musyarakah financing and leverage to earnings quality, within Bank Umum Syariah (BUS) and Unit Usaha Syariah (UUS) during economic meltdown period in Indonesia between 2014-2016. The results show that there are no significant differences in the earnings quality within sharia bank types during the observed period. Furthermore, the results show that the effect of mudharabah-musyarakah financing and leverage to earnings quality within sharia bank types are in significant within the same observed period.

Corporate Governance and Enterprise Governance

2019 ◽  
Author(s):  
Brett McDonnell
Keyword(s):  
Corporate Governance ◽  
Private Equity ◽  
Agency Problem ◽  
The United States ◽  
Fiduciary Duty ◽  
Minority Shareholders ◽  
Potential Conflict ◽  
Unique Problem ◽  
Special Cases ◽  
Enterprise Governance

Corporate governance includes legal, contractual, and market mechanisms that structure decision-making within business corporations. Most attention has focused on corporate governance in large U.S. public corporations with dispersed shareholding. The separation of ownership from control in those corporations creates a unique problem, as shareholders typically have weak individual incentive to monitor managers. Mechanisms that have been developed to address this agency problem include independent directors, fiduciary duty, securities law disclosure, executive compensation, various professional gatekeepers, the market for corporate control, and shareholder activism. In most countries outside the United States, there are few companies with dispersed shareholding. Instead, most companies have a controlling shareholder or group. These companies face a different agency problem, the possibility that controlling shareholders may use their power to gain at the expense of minority shareholders. Enterprise governance refers to mechanisms aimed at related agency problems that occur in closely held companies without publicly traded equity interests. Here too the agency problem typically encountered is the potential conflict between controllers and minority investors, with the added twist that share illiquidity removes an important protection for the minority. Closely held companies have adopted a variety of contractual mechanisms to address these concerns. Other than the important but special cases of venture capital and private equity fund investments, there is less empirical evidence on governance in closely held companies because information is generally much harder to find.

scholarly journals Optimal capital structure and the debtholder-manager conflicts of interests: a management decision model

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Olanike Akinwunmi Adeoye ◽  
Sardar MN Islam ◽  
Adeshina Israel Adekunle
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Differential Game ◽  
Agency Problem ◽  
Dynamic Game ◽  
Cost Of Debt ◽  
Conflicts Of Interests ◽  
Content Type ◽  
Optimal Capital Structure ◽  
Optimal Capital

Purpose Determining the optimal capital structure becomes more complicated by the presence of an agency problem. The issuance of debt as a corporate governance mechanism introduces the asset substitution problem – the agency cost of debt. Thus, there is a recognized need for models that can resolve the agency problem between the debtholder and the manager who acts on behalf of the shareholder, leading to optimal capital structure choice, and enhanced firm value. The purpose of this paper is to model the debtholder-manager agency problem as a dynamic game, resolve the conflicts of interests and determine the optimal capital structure. Design/methodology/approach As there is no satisfactory model for dealing with the above issues, this paper uses a differential game framework to analyze the incongruity of interests between the debtholder and the manager as a non-cooperative dynamic game and further resolves the conflicts of interests as a cooperative game via a Pareto-efficient outcome. Findings The optimal capital structure required to minimize the marginal cost of the agency problem is a higher use of debt, lower cost of equity and withheld capital distributions. The debtholder is also able to enforce cooperation from the manager by providing a lower and stable cost of debt and a greater debt facility in the overtime framework. Originality/value The study develops a new dynamic contract theory model based on the integrated issues of capital structure, corporate governance and agency problems and applies the differential game approach to minimize the agency problem between the debtholder and the manager.

Nongovernmental Organizational Governance and Corporate Governance: A Comparative Analysis

2007 ◽  
Vol 22 (1) ◽  
pp. 47-71
Author(s):  
Kim Jun Ki
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
Agency Problem ◽  
Governance Structure ◽  
Community Services ◽  
Organizational Setting ◽  
Organizational Governance ◽  
Board Performance ◽  
Definition Of ◽  
And Control

In an organizational setting, the board members are the persons in whom power is entrusted by the principals to act as fiduciaries and to guide the organization. A main cause of concern originates from the elassical problem of the separation of ownership and control. Although agency theory, the dominant approach to research on corporate governance in particular, holds that the separation of ownership and control constitutes an efficient division of labor, there is widespread awareness that managers and boards may take actions that hurt principals or constituencies they are meant to serve. An agency problem can manifest in several ways. First, managers and boards exert insufficient effort while overcommitting themselves to external activities. Secon, they might reap private benefits in the form of perks. Last, they may take unnecessary risks by committing to mature projects. This basic agency problem suggests a possible definition of corporate governance and nongovernmental (organizational) governance as addressing both and adverse selection and a moral hazard problem. A good governance structure is then one that selects the most able managers and makes them accountable to relevant constituents. Moreover, strengthening board performance in NGOs and thus their governance structure is widely recognized as being a major requisite for the improvement of community services that NGOs provide.

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