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Ownership, governance mechanisms, and agency costs in China’s listed firms

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  • Michael Firth
  • Peter M Y Fung
  • Oliver M Rui

    (Lingnan University)

Abstract

Our study analyses the relations among agency costs, ownership structure, and governance mechanisms in Chinese listed firms. We find that firms with foreign shareholders incur higher agency costs. Legal person shareholders, our proxy for institutional investors, and government ownership have no impact on the level of agency costs. We also find that boards with a majority of outside directors are not associated with lower agency costs. There is some evidence that concentrated ownership is associated with lower agency costs. Although Chinese listed firms have engaged in ownership and governance reform, this has not manifested itself in a reduction in agency costs.

Suggested Citation

  • Michael Firth & Peter M Y Fung & Oliver M Rui, 2008. "Ownership, governance mechanisms, and agency costs in China’s listed firms," Journal of Asset Management, Palgrave Macmillan, vol. 9(2), pages 90-101, July.
    • Handle: RePEc:pal:assmgt:v:9:y:2008:i:2:d:10.1057_jam.2008.13
    DOI: 10.1057/jam.2008.13
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    Cited by:

    1. Ajay Yadav & Jaya Mamta Prosad & Sumanjeet Singh, 2023. "Pre-IPO Financial Performance and Offer Price Estimation: Evidence from India," JRFM, MDPI, vol. 16(2), pages 1-19, February.
    2. Mahdi Salehi & Mohammad Sadegh Adibian & Zakiyeh Sadatifar & Ehsan Khansalar, 2021. "The relationship between corporate governance characteristics and agency costs," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 39(1), pages 199-220.
    3. Omar Fareed Shaqqour, 2020. "Impact of Institutional Governance Tools on Reducing Agency Costs to Commercial Banks Listed in the Amman Stock Exchange," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 414-423, October.
    4. Wang, Di & Liu, Guangqiang & Xie, Linlin, 2023. "Can compulsory liability insurance reduce agency costs? Evidence from China," Research in International Business and Finance, Elsevier, vol. 65(C).

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    agency costs; corporate governance;

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