Agency theory and Agency cost
Ang (2ooo) examines the following hypotheses :
(1) agency costs are higher at firms whose managers own none of the firm’s equity;
(2) Agency costs are an inverse function of the managers’ ownership stake;
(3) Agency costs are an increasing function of the number of nonmanager shareholders
Conclusions from data ( of US small businesses)
(1) agency costs are higher when an outsider manages the firm;
(2) Agency costs vary inversely with the manager’s ownership share;
(3) Agency costs increase with the number of nonmanager shareholders;
(4) External monitoring by banks produces a positive externality in the form of lower agency costs.
2006.6.11
posted by yuhu @ 11:49 AM
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