Influence of Corporate Governance and Capital Structure Indexes on Agency Cost

Document Type : Original Article

Authors

1 Assistant professor and faculty member of Islamic Azad University, Qazvin Branch, corresponding author

2 Master student of Islamic Azad University, Qazvin Branch

10.22034/iaar.2012.104687

Abstract

This investigate examines the effects of governance and ownership variables on the agency costs. In this study, 74 firms were selected as a statistical sample from 16 different industry groups during 1383-87 that totally created 356 year firm. Here, we have investigated stimulant duality Chief Executive Officer and the membership of board, the board tenure, non-executive directors' ratio on the board, and institutional owners as research assumptions.
For testing research assumptions from multivariate regression and Tobit, it is benefited by using panel data in the 5 year period. To determine effect of agency cost, we choose two variables: 1) net sale to total asset: we used multivariate regression and due to applying incorporated data, to eliminate variance inconsistency, we used the EGLS method. 2) Q-Tobin multiple by free cash flow: in which Q is the firms tobin that they will accept virtually 0 and 1 numbers we conducted Tobit regression by estimating maximum likelihood
Findings corroborate the presence of positive and significantly relationship between the ratio variables non-executive directors on the board and the board tenure and the significantly and negative relationship between institutional owners' variable and the agency cost. But there was no significant relation between duality Chief Executive Officer and the membership of board.

Keywords

Accounting and Auditing Research
Volume 4, Issue 14
July 2012
Pages 82-97

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