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Industry Competition, Agency Problem, and Firm Performance

Author

Listed:
  • Sue-Fung Wang

    (School of Economics and Management, Wuhan University, Wuhan, China. Institution of Finance, National Chiao Tung University, Hsinchu, Taiwan.)

  • Yow-Jen Jou

    (School of Economics and Management, Wuhan University, Wuhan, China. Institution of Finance, National Chiao Tung University, Hsinchu, Taiwan.)

  • Ke-Chiun Chang

    (School of Economics and Management, Wuhan University, Wuhan, China.)

  • Kun-Wei Wu

    (School of Economics and Management, Wuhan University, Wuhan, China. Institution of Finance, National Chiao Tung University, Hsinchu, Taiwan.)

Abstract

The study investigates the relationship between industry competition and firm performance in relation to agency problem conditions. At the same time, the literature also stated that different levels of national corporate governance have different impacts on corporate performance. We also investigate whether or not the relation between industry competition and firm performance would be different under different levels of agency problem. Our empirical results show that the positive relation between industry competition and firm performance is relatively significant for firms with higher free cash flows that present severe agency problems. The results do not change under different levels of national corporate governance.

Suggested Citation

  • Sue-Fung Wang & Yow-Jen Jou & Ke-Chiun Chang & Kun-Wei Wu, 2014. "Industry Competition, Agency Problem, and Firm Performance," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 76-93, December.
    • Handle: RePEc:rjr:romjef:v::y:2014:i:4:p:76-93
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    industry competition; agency problem; country-level governance;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • G3 - Financial Economics - - Corporate Finance and Governance

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