How Do Agency Costs Affect Firm Value? Evidence from China

2011 ◽  
Author(s):  
Sheng Xiao ◽  
Shan Zhao
Keyword(s):  
Firm Value ◽  
Agency Costs

scholarly journals KETERKAITAN MANAGERIAL OWNERSHIP DAN LEVERAGE TERHADAP NILAI PERUSAHAAN: DALAM KONTEK HUBUNGAN KEAGENAN PERUSAHAAN DI INDONESIA

2021 ◽  
Vol 5 (1) ◽  
pp. 160
Author(s):  
Margarita Ekadjaja ◽  
Rorlen Rorlen ◽  
Fanny Andriani Setiawan ◽  
Kartika Nuringsih
Keyword(s):  
Decision Making ◽  
Firm Value ◽  
Agency Costs ◽  
Least Square ◽  
Managerial Ownership ◽  
Corporate Value ◽  
Manufacturing Companies ◽  
Positive Interaction ◽  
Two Stage ◽  
The Relationship

Manajemen dan nilai perusahaan memiliki keterkaitan yang tidak dapat dipisahkan.  Dimana manajemen perusahaan merupakan penggerak roda perusahaan dan berorientasi pada nilai perusahaan. Peran seorang manajer adalah memaksimalkan kekayaan bagi pemegang saham.  Namun, manajer yang tidak memiliki kepemilikan saham yang signifikan di perusahaan dapat memilih untuk memaksimalkan keuntungan bersih mereka sendiri dengan mengorbankan pemilik perusahaan. Akibatnya, pemilik terpaksa mengeluarkan biaya agensi untuk memastikan bahwa manajemen perusahaan bertindak dengan cara yang tepat. Cara untuk mengurangi biaya agensi adalah memaksa perusahaan untuk meningkatkan hutang. Tujuan penelitian adalah  menguji hubungan simultan pertukaran antara ownership, leverage, dan nilai perusahaan sehubungan dengan keagenan pada perusahaan manufaktur di Indonesia dari tahun 2012-2018. Penelitian ini menambah pemahaman mengenai keterkaitan antara ownership dengan leverage, dan nilai perusahaan. Analisis data untuk argumen tentang keterkaitan simultan antara  ownership, leverage, dan nilai perusahaan melalui data panel regresi berganda 2 SLS (Two Stage Least Square). Bidang penelitian ini diperluas dengan mempertimbangkan model empiris di mana ownership dan leverage masing-masing diperlakukan sebagai variabel endogen atau ditentukan bersama.  Dalam metode 2 SLS ada 2 kali variabel yang diobservasi secara simultan untuk menghindari bayes sehingga variabel tersebut tidak bias, di mana variabel managerial ownership dan Leverage merupakan determinan non linier nilai perusahaan sebagai bagian integral dari pengambilan keputusan perusahaan dalam kerangka keagenan.  Persamaan Regresi hasil uji 2SLS memunjukkan keterkaitan nilai perusahaan dengan managerial ownership dan leverage. Hasil menunjukkan interaksi positif  tidak signifikan antara managerial ownerhip dengan nilai perusahaan, interaksi positif signifikan antara nilai perusahaan dengan leverage, dan interaksi yang negatif signifkan antara managerial ownership dengan leverage. Management and corporate value have an inseparable relationship. Where the company management is the driving force of the company and oriented to corporate values. The role of a manager is to maximize wealth of shareholders. However, managers who do not have a significant share in the company may choose to maximize their own net profits at the expense of the company owners. As a result, the owners are forced to incur agency costs to ensure that company management acts in an appropriate manner. The way to reduce agency costs is to force the company to increase debt. The research objective is to examine the exchange simultaneous relationship between ownership, leverage, and corporate value with respect to agency in manufacturing companies in Indonesia from 2012-2018. This study adds to the understanding of the relationship between ownership and leverage, and corporate value. Data analysis for arguments about the simultaneous relationship between ownership, leverage, and firm value through 2 SLS (Two Stage Least Square) multiple regression panel data. This field of research is extended by considering empirical models in which ownership and leverage are treated as endogenous or co-determined variables, respectively. Ownership and Leverage as an integral part of corporate decision making within an agency framework, which in turn will affect the value of the company. In the SLS 2 method, there are 2 variables that are observed simultaneously to avoid bayes so that the variable is not biased, in which the managerial ownership and leverage variables are nonlinear determinant corporate value as an integral part of corporate decision making within the agency framework, which in turn will affect firm value. The 2SLS regression equation results show the relationship between firm value and managerial ownership and leverage. The results prove that there is a positive interaction between managerial ownership between firm value, a significant positive interaction between firm value and leverage, and a significant negative interaction between managerial ownership and leverage.

Initial Coin Offerings, Speculation, and Asset Tokenization

2020 ◽  
Author(s):  
Jingxing (Rowena) Gan ◽  
Gerry Tsoukalas ◽  
Serguei Netessine
Keyword(s):  
Moral Hazard ◽  
Operations Management ◽  
Firm Value ◽  
Agency Costs ◽  
Demand Uncertainty ◽  
Customer Demand ◽  
Demand Characteristics ◽  
Operating Strategy ◽  
Mean Variance ◽  
Initial Coin Offerings

Initial coin offerings (ICOs) are an emerging form of fundraising for blockchain-based startups. We examine how ICOs can be leveraged in the context of asset tokenization, whereby firms issue tokens backed by future assets (i.e., inventory) to finance growth. We (i) make suggestions on how to design such “asset-backed” ICOs—including optimal token floating and pricing for both utility and equity tokens (a.k.a. security token offerings)—taking into account moral hazard (cash diversion), product characteristics, and customer demand uncertainty; (ii) make predictions on ICO success/failure; and (iii) discuss implications on firm operating strategy. We show that in unregulated environments, ICOs can lead to significant agency costs, underproduction, and loss of firm value. These inefficiencies, however, fade as product margins and demand characteristics (mean/variance) improve, and they are less severe under equity (rather than utility) token issuance. Importantly, the advantage of equity tokens stems from their inherent ability to better align incentives and thus continues to hold even absent regulation. This paper was accepted by Vishal Gaur, operations management.

Kelly Solar

2017 ◽  
pp. 1-3
Author(s):  
Samuel E. Bodily ◽  
Marc L. Lipson ◽  
Kenneth C. Lichtendahl
Keyword(s):  
Firm Value ◽  
Agency Costs ◽  
Debt Overhang ◽  
Start Up ◽  
Outstanding Debt ◽  
Agency Costs Of Debt

A small start-up company must make additional investments to maximize its firm value. But the company owner will not make this investment unless she can renegotiate outstanding debt claims. Solving this “debt overhang” problem through negotiation is the focus of the case. In this context, students are exposed to a variety of issues: the nature of financial claims, bargaining and negotiation fundamentals, and agency costs of debt.

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.

Short-termism, Managerial Talent, and Firm Value

2020 ◽  
Author(s):  
Richard T Thakor
Keyword(s):  
Labor Market ◽  
Firm Value ◽  
Agency Costs ◽  
Rent Seeking ◽  
Investment Horizon ◽  
Managerial Talent ◽  
Editorial Decision ◽  
Short Termism ◽  
Is Value

Abstract This paper examines how the firm’s choice of investment horizon interacts with rent-seeking by privately informed, multitasking managers and the labor market. Two main results surface. First, managers prefer longer-horizon projects that permit them to extract higher rents from firms, so short-termism involves lower agency costs and is value maximizing for some firms. Second, when firms compete for managers, firms practicing short-termism attract better managerial talent when talent is unobservable, but larger firms that invest in long-horizon projects hire more talented managers when talent is revealed. (JEL D82, D86, G31, G32, J41) Received July 25, 2019; editorial decision July 7, 2020 by Editor Uday Rajan.

scholarly journals Ownership Structure And Market Valuation: The Case Of Very Small, Young, And Fast-Growing Firms

2011 ◽  
Vol 3 (11) ◽  
Author(s):  
William Barnes ◽  
T. Harikumar ◽  
Greg Roth
Keyword(s):  
Ownership Structure ◽  
Firm Value ◽  
Agency Costs ◽  
Board Member ◽  
Market Valuation ◽  
Managerial Ownership ◽  
Entrepreneurial Firms ◽  
Fast Growing ◽  
Entrepreneurial Firm ◽  
Established Firms

In studies of primarily large, established firms, researchers find that increasing managerial ownership increases firm value, at least in some ranges of ownership.  This evidence suggests that increasing managerial ownership can decrease net agency costs.  Our study investigates managerial ownership and firm value for an atypical sample: very small, young, and fast-growing firms.  We argue that increasing managerial ownership likely increases net agency costs in small, entrepreneurial firms.  Consistent with this argument, we find that entrepreneurial firm value is positively related to outside board member ownership, but negatively related to inside board member ownership. 

scholarly journals Corporate governance, agency costs and investment appraisal: An assessment

2012 ◽  
Vol 9 (4-2) ◽  
pp. 208-220
Author(s):  
Baliira Kalyebara ◽  
Abdullahi D. Ahmed
Keyword(s):  
Corporate Governance ◽  
Interest Rates ◽  
Capital Markets ◽  
Capital Market ◽  
Firm Value ◽  
Agency Costs ◽  
Investment Decisions ◽  
Market Interactions ◽  
Investment Appraisal

Undoubtedly, capital markets have an impact on investment appraisal decisions through interest rates (cost of capital) charged and debt covenants stipulated in debt contracts. However, the extent of influence of their interactions in shaping and determining a firm’s corporate governance policy, agency costs, investment decisions and firm value has been overlooked or not duly emphasised in the literature to date. This lack of interdisciplinary research in areas such as finance, accounting, capital markets and corporate governance may lead financial managers making wrong interpretation of the current empirical evidence. This may result into suboptimal decisions in capital budgeting decisions. There are various existing studies that have discussed the relation between corporate governance and one or two other business topics this paper is assessing. However, questions have persisted about the role capital markets’ interactions play in determining firm’s corporate governance, minimizing agency costs, long term investment decisions and firm value. The recent high profile global company collapses mainly due to poor corporate governance mechanisms have rekindled the interest in the role capital market interactions play in formulating firm’s corporate governance rules and policies and their impact on agency costs, investment appraisal decisions and firm value. This study intends to assess this issue and critically evaluates these related issues. The impact of multiple objectives on long-term investment decisions is also discussed. We find that capital market interactions have a significant impact in the way firms formulate their corporate governance, identify and control agency costs, optimize multiple objectives, make investment decisions and determine firm value. In a nutshell, there is a consensus among researchers that capital markets impact on capital investment decisions and firm value through interest rates, debt covenants that impact on managers’ self-interest behaviour, corporate governance policies and agency costs.

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