Determining Agency Theory Framework through Financial Leverage &amp; Insider Ownership: Evidence from Pakistan

Javaid, Hafiz Mustansar; Javid, Snober

doi:10.5539/ijef.v9n3p21

Cited by 5 publications

(4 citation statements)

References 2 publications

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“…Mekanisme internal tata kelola perusahaan meliputi ukuran struktur kepemilikan, dewan komisaris, direktur, remunerasi direktur, komite audit dan transparansi (Khan et al, 2020). Hasil penelitian Javaid & Javid (2017) menemukan bahwa praktik tata kelola perusahaan yang baik akan membantu perusahaan dalam meningkatkan kinerja dan membawa kepercayaan investor. Dalam mengukur biaya keagenan, penelitian ini menggunakan rasio biaya, di mana biaya operasi dibandingkan dengan penjualan tahunan.…”

Section: Pendahuluanunclassified

Tata Kelola Perusahaan dan Biaya Agensi: Studi Kasus pada Badan Usaha Milik Daerah (BUMD) Provinsi DKI Jakarta

Wijiharjono¹,

Chandra²,

Rachman³

2022

Preprint

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The purpose of this study is to investigate the effect of corporate governance mechanisms using agency costs in state-owned companies (BUMD). BUMD is formed by the local government, has a dual role, namely to serve the community as well as make a profit. Not many BUMDs are able to develop in accordance with this assistance. Agency problems arise when the agent deviates from the interests of the principal. Local government control over BUMD is needed so that can be explained in the interests of the principal. The results of the Panel Data Regression Analysis revealed that the variables that were able to reduce agency costs at the expense ratio proxy were the number of directors, total sales, total assets. These three variables agency cost, while the variable that can increase agency costs on the proxies of asset utilization ratios and Return On Assets (ROA) is total sales. If the total sales variables is increasing, it will increase the ratio of asset initialization and ROA.

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Section: Pendahuluanunclassified

Tata Kelola Perusahaan dan Biaya Agensi: Studi Kasus pada Badan Usaha Milik Daerah (BUMD) Provinsi DKI Jakarta

Wijiharjono¹,

Chandra²,

Rachman³

2022

Preprint

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“…In addition, high debt financing can encourage managers to reduce the risk of job losses and bankruptcy by using cash flow efficiently and investing in profitable projects that generate efficient cash flow to serve the debt (Rozeff 1982; Al‐Najjar 2011). Accordingly, firms prefer to use retained internal financing in favor of debt to enhance the firm's ability to resist a period of weak performance and allow it to implement a recovery plan, although this may impede dividends at the same time (Javaid and Javid 2017). Conversely, Easterbrook (1984b) debates the role of the dividends mechanism in controlling the complications between board of directors and stockholders.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

The Effect of the Financial Structure Decision and Governance Mechanism on Shareholders' Wealth: Nonlinearity Evidence from a Petroleum‐based Economy

Shaddady

2022

Asia-Pac J of Fin Stud

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This study was designed to determine the nature of the association between the financial structure decision and shareholders' wealth—dividend payments—of firms listed on one of the largest stock markets in oil‐based economies, the Saudi stock market. The study used panel data for all nonfinancial firms listed in Saudi Arabia's primary stock market (TASI) during the period from 2000 to 2018. The pooled ordinary least squares, quantile, generalized method of moments and U‐tests were conducted to evaluate the association between the financial structure decision and dividend payment. The preliminary findings revealed a positive effect of financial leverage on dividend payments using a linear model. However, when a nonlinear model was used, the study found a nonlinear relation between the financial structure decision and dividend payouts, which exhibited an inverted U‐shaped curve driven by levels of debt. This nonlinear relation verifies the tenets of the trade‐off theory of optimum debt level based on the costs and benefits of the debt. Further, the study found a negative influence of firm performance, size, and age on dividend payments. The outcomes of this study may provide useful insights for policymakers, managers, and lenders into the optimal level of financial leverage and efficient dividend policies.

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“…In this sense, investors demand the presence of audit committees in the companies whose members have relevant expertise (Ghafran and O'Sullivan, 2013). Audit committees with financial expertise are considered an internal monitoring mechanism that can mitigate agency problems and tend to impact on indebtedness policy (Javaid and Javid, 2017). Past research has analysed the effect of some aspects of corporate field with the level of debt such as the independent directors (Doan and Nguyen, 2018), audit committees expertise (Carcello, Hollingsworth, Klein and Neal, 2006), firm size (Harford, Li and Zhao, 2007), Board Structure Type (Calza, Profumo and Tutore, 2017), CEO duality (Harris, 2014), board structure type (Pucheta-Martínez, Gallego-Álvarez and Bel-Oms, 2019), gender diversity (Harris, 2014), among others.…”

Section: Hypothesismentioning

confidence: 99%

Big Data in Corporate Governance decision

Grau

Oms

2020

CARMA 2020 - 3rd International Conference on Advanced Research Methods and Analytics

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Progress in Big Data in recent years has grown exponentially, which hasallowed the detection and processing of a large amount of data. Until recently,this fact was unattainable by the lack of mechanization of the corporategovernance reports. This paper investigates the relationship betweencorporate governance decisions affect the indebtedness policies of 1,956industrial companies listed in Europe and the USA over the period 2016–2018(5,868 observations). To measure corporate governance decisions, we usedetailed information on the expertise of audit committees, the proportion ofindependent directors, board structures and women's presence on corporateboards. Our findings, which are based on a static panel data analysis, showthat there is a strong negative relationship between Audit Committeesexpertise and indebtedness level in European and North American companies.There are also evidence that European and American companies with a one-tier board structure and Audit Committees expertise are less likely to havelower level of indebtedness. Our results shed new light on corporategovernance in relation to the experience of audit committees and the influenceof their characteristics on indebtedness policy.

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Determining Agency Theory Framework through Financial Leverage & Insider Ownership: Evidence from Pakistan

Cited by 5 publications

References 2 publications

Tata Kelola Perusahaan dan Biaya Agensi: Studi Kasus pada Badan Usaha Milik Daerah (BUMD) Provinsi DKI Jakarta

Tata Kelola Perusahaan dan Biaya Agensi: Studi Kasus pada Badan Usaha Milik Daerah (BUMD) Provinsi DKI Jakarta

The Effect of the Financial Structure Decision and Governance Mechanism on Shareholders' Wealth: Nonlinearity Evidence from a Petroleum‐based Economy

Big Data in Corporate Governance decision

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