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The relationship between corporate governance characteristics and agency costs

Author

Listed:
  • Mahdi Salehi

    (Ferdowsi University of Mashhad, Postal code 9177948974, Mashhad, Iran)

  • Mohammad Sadegh Adibian

    (Ferdowsi University of Mashhad, Mashhad, Postal code 9177948974, Iran)

  • Zakiyeh Sadatifar

    (Imamreza International University of Mashhad, Postal code 916789412, Mashhad, Iran)

  • Ehsan Khansalar

    (Kingston University London, London, the UK)

Abstract

The present study aims to evaluate the contributing factors to agency costs in Iran. In this regard, 112 companies were studied over 2010 - 2016. Since the model is dynamic and the dependent variable suffers from a lag, the generalized method of moments is employed to free the independent variables and the disruptive component. The findings indicate a significant lag in the dependent variable of all three models. An audit committee’s presence significantly affects the decline of agency costs in all three models. Moreover, results suggest that family companies and the state shareholders of all three models have no significant impact on the agency costs. The existence of financial leverage matching with all three models causes the decline of agency costs. In terms of assets, Larger companies based on the three models have more agency costs as well.

Suggested Citation

  • 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.
    • Handle: RePEc:rfe:zbefri:v:39:y:2021:i:1:p:199-220
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    References listed on IDEAS

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    Cited by:

    1. Kuo, Nan-Ting & Li, Shu & Jin, Zhen, 2023. "Social trust and the demand for audit quality," Research in International Business and Finance, Elsevier, vol. 65(C).

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    More about this item

    Keywords

    agency costs; dynamic panel; generalized method of moments; factor analysis; and audit committee;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General

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