Corporate governance and agency problems

Abstract

This study investigates the role of corporate governance in the relationship between the average employee length of service and firm value. Hong (2016) argues that firm value decreases as the average employee length of service increases. By expanding Hong's (2016) study, this study analyses the role of corporate governance using the KCGS evaluation scores. The results show that corporate governance mitigates the negative effect of the average employee length of service on firm value. This research contributes to the literature by verifying that corporate governance plays an important role in the agency problem regarding the employees and, therefore, takes a step forward from those of earlier studies which have clarified the role of corporate governance in the agency problem about the managers.