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Nowadays, the call for sustainable development is becoming stronger in all countries of the world, and environmental, social, and governance (ESG) performance, as a vivid practice of this concept, has gradually received extensive attention from enterprises and investors. Financial institutions have an important position in the national economy as an important tool for the state to regulate the macroeconomy. Whether ESG performance can improve financial institutions' efficiency is of key significance for boosting sustainable development. Based on data from China's listed financial institutions from 2015 to 2021, this study aims to investigate the impact of ESG performance on financial institutions. The robust nonparametric boundary model and fixed-effects model are employed for analysis. The empirical results demonstrate that ESG performance and its sub-indicators of environmental performance and social responsibility performance can significantly enhance financial institutions' efficiency. In particular, this effect is more pronounced in the securities industry and diversified financial industry, as well as in non-state and small-scale financial institutions. The results remain unchanged after a series of robustness tests. Furthermore, the mechanism tests indicate that ESG performance can enhance financial institutions' efficiency by reducing downside risk and agency costs. [ABSTRACT FROM AUTHOR]

Based on the analysis of data from listed enterprises in China between 2011 and 2022, we investigate the influence of digital transformation on the governance efficiency for minority shareholders. The results show that the extent of digital transformation exert a negative effect on the agency costs incurred from related-party transactions. The mechanism examination elucidates that digital transformation augments the governance efficiency for minority shareholders by boosting attendance at shareholders' meetings and enhancing the exit threat for minority shareholders. Subsequent analysis reveals that non-state-owned enterprises, compared to state-owned enterprises, exhibit a more pronounced effect in diminishing the second type of agency costs through digital transformation. Furthermore, the impact of digital transformation in curtailing agency costs is more significant in the eastern regions than central and western regions. The better the equity checks and balances in listed enterprises, the more effective digital transformation is in reducing agency costs. This study offers valuable insights for bolstering the governance capacity of minority shareholders in the context of digital transformation. [ABSTRACT FROM AUTHOR]

Mobility as a Service (MaaS) is a recent innovative transport concept, anticipated to oblige significant changes in current transport practices. This study aimed to develop a methodology to justify the potential MaaS adoption. For this purpose, an innovative methodology is presented to identify four types of stations, including "Transit (servicing travelers by bus)", "Micro-mobility (servicing travelers by bike and scooter)", "MaaS (servicing travelers by bus, bike, scooter, and Uber)", and "None (no station)" for each node. The proposed methodology minimizes the total user and agency costs, including user travel time cost, out-of-pocket costs, agency construction costs for MaaS and agency MaaS operating costs. The methodology was tested with a 100 node transport network with existing bus routes. The following results were acquired: 1) Construction of micro-mobility station was not justified for 42 nodes and 37 nodes in 20-years and 30-years life cycles if only 20% of demand from shortest path demand select micro-mobility options 2) Over 20-years and 30-years life cycles, the operator benefits from daily savings amounting to $18,520 and $16,033, respectively, and 3) There are no consistent results to justify the MaaS construction and operation based on existence of the transit stations. In other words, the justification depends on users' shortest trip paths, amount of demand, and existing transit stations. [ABSTRACT FROM AUTHOR]

Taking Chinese non-financial A-share companies listed on the Shenzhen Stock Exchange (SZSE) between 2003 and 2018 as a sample, this paper empirically examines whether and how institutional investors' site visits (SVs) affect corporate investment-cash flow sensitivity (ICFS). The results show that institutional investors' SVs can reduce ICFS, and this effect is more obvious for companies with fewer investment opportunities, larger sizes, higher internal cash flows, and higher agency costs, indicating that institutional investors' SVs primarily inhibit ICFS caused by agency conflicts rather than financing constraints. In addition, the inhibitory effect of institutional investors' SVs on ICFS exists mainly in companies with poor internal supervision governance and weak executive compensation incentive mechanisms, indicating that institutional investors' SVs and other forms of corporate governance mechanisms operate as substitutes in reducing ICFS. This paper reveals the important role of institutional investors' SVs in reducing ICFS, with important theoretical and practical implications for regulators to progressively regulate and promote this form of investor activity. [ABSTRACT FROM AUTHOR]

Digital transformation has emerged as a powerful force in reshaping the business landscape and enabling organizations to enhance their capabilities. One critical aspect of this change is how it impacts an enterprise’s innovation ability. To explore this question, we select data regarding China’s A-share listed enterprises from 2007 to 2021 as the research sample. We employ crawler technology to gather keywords related to “digital transformation” from annual reports, portraying detailed journeys of enterprises’ digital transformation. Through descriptive statistics and multiple covariance tests, a linear relationship is established between digital transformation and innovation ability. Benchmark regression is conducted and a robustness test is utilized to determine the robustness of the benchmark regression. The mechanism, heterogeneity, and moderating effects of this study are also tested. The results reveal that digital transformation makes a significant positive contribution to the innovation capability of enterprises. Meanwhile, among different types of enterprises, the impact of digital transformation on enterprise innovation capability shows heterogeneity. In terms of the impact mechanism, digital transformation can enhance the innovation output of enterprises by reducing the agency cost and improving the risk-taking level of enterprises, so as to further improve the innovation capability of enterprises. The research results of this paper provide essential theoretical support for the digital transformation of enterprises and the government’s formulation of enterprises’ digitalization strategies. More profoundly, it provides significant reference for how to further promote the digital transformation of Chinese enterprises. [ABSTRACT FROM AUTHOR]

The bilateral Bus Rapid Transit (BRT) system is a kind of BRT system in which the stops are located in the middle of the transit lane. By simultaneously serving transit lines in opposite directions, it is particularly designed to save space resources and enhance service quality. To improve the operational efficiency of the bilateral BRT, this paper optimizes the operational performance of bilateral BRT with elastic demand. The objective is to minimize the generalized time cost per passenger of the system by jointly optimizing the headway and number of stops of bilateral BRT. The cost includes the agency operating and user travel. The optimal design model is formulated as a mixed-integer program and solved using a fuzzy analytic hierarchy process (FAHP) and a genetic algorithm (GA). We conduct a case study and sensitivity analysis to show the effectiveness and reliability of the proposed approach. We conclude that the optimized minimum generalized cost per passenger is lower than the actual case for all demand levels, especially at off-peak hours, by about 22.5%. In addition, we find that the weights of agency and user costs have the most significant impact on headway, whereas the influence of walking, vehicle speed, and route length is minimal. In contrast, the optimal number of BRT stops is mostly influenced by the route length, and walking speed has essentially no effect on the optimal number of stops. Finally, we find that the generalized cost per passenger at peak hours is 10% to 15% smaller than at off-peak hours in various scenarios. [ABSTRACT FROM AUTHOR]

The sustainability of pavement, especially in Maintenance and Rehabilitation (M&R) scheduling, has become an immense concern and has received limited attention in previous studies. Therefore, this study aimed to develop the M&R scheduling optimization based on sustainability. To this end, a novel sustainability index was introduced, in which all the sustainable development aspects were considered, including highway agency cost, environmental impacts, and social effects. A conventional model was used to assess the sustainable model's effectiveness. Two new constraints are introduced to reduce the budget fluctuation and not to apply the M&R treatments for two consecutive years to make the model practical. On the other hand, highway agencies face large-scale networks, in which the optimization of M&R scheduling has computational complexities. Thus, the novel and powerful metaheuristic algorithm, named Marine Predator Algorithm (MPA), was applied to solve the pavement M&R scheduling problem. A large-scale pavement network, including 110 sections, was analyzed over a 5-year plan as the case study. The results indicated that using the sustainable model rather than the conventional one leads to a 6.5% reduction in CO2 emission. Besides, utilizing the sustainable approach enhances the equity and safety indices by 40.7% and 2.5% compared to the conventional treatment. However, the highway agency cost is increased by 1.1% using the sustainable model. [ABSTRACT FROM AUTHOR]

Research regards related party transactions (RPTs) and control-ownership divergence (wedge) as expropriation mechanisms manifesting severe agency conflict in emerging markets. Since corporate governance greatly influences firms' investments and strategic behavior, this study examines how different RPTs and the wedge affect cross-border acquisition (CBA) size and returns. In line with agency theory, opportunistic RPTs like loans/guarantees reduce CBA returns. However, operating RPTs are positively related to returns as the market seems to link these RPTs with benefits to firms. The CBA performance of wedge firms varies with RPT types. While loans/guarantees by wedge firms reduce returns due to combined tunneling incentives, operating RPTs impact returns positively, reflecting more economic benefits in wedge firms. The wedge or RPTs are also positively related to CBA size. But increased tunneling incentives restrain wedge firms that give loans/guarantees from large CBAs. Finally, family firms or large group affiliates that provide loans/guarantees or sustain the wedge reduce returns yet make larger CBAs. Overall, agency costs of expropriation mechanisms depend on RPT types and receive further impetus in family firms or group affiliates with extensive intra-group linkages. [ABSTRACT FROM AUTHOR]

This study explores the association between board composition and the financial performance of the companies listed on the BSE-500 Index. The authors also analyse whether financial performance mediates the relation between board composition and executive compensation or not. The authors utilised a sample of 319 non-financial firms from the BSE-500 Index from 2010–11 to 2019–20. This time period was purposely chosen to eliminate the consequences of the 2007–2008 global financial crisis to reduce any uncertainty that may influence the company's financial performance. OLS regression techniques with firm fixed and time effects have been incorporated to test the hypotheses. To address the issues of reverse causation and endogeneity, regression models were employed with one-year lagged values for all predicted variables. In addition to OLS, the GMM technique is also used to validate the findings of the study. The findings show that financial performance fully mediates the link between board composition variables, except gender diversity, and executive compensation. These results suggest that a successful corporate governance system relies on the board's composition and how well it supervises its executives. Thus, the board may devise a fair compensation structure which is linked to financial performance to reduce managerial opportunism. This could help in aligning the interest of managers and shareholders, therefore lowering agency costs and boosting financial performance. Although executives are held accountable for the organisation's growth, sometimes they may act in their interest instead of the shareholders. Therefore, this study contributes to the literature on executive compensation and provides insights into reducing the opportunistic behaviour of managers through compensation design. In the pre-existing literature, limited studies are available that examine the direct or indirect effect of financial performance on the association between board composition and executive compensation among Indian companies. This study adds evidence to the literature on board composition of companies, financial performance, and executive compensation. This study is helpful for executives of the company and regulatory authorities while making decisions regarding board composition and executive compensation. This study encourages future researchers to conduct longitudinal studies with a larger sample and a longer time horizon. [ABSTRACT FROM AUTHOR]

The paper has two main objectives: one, to investigate if inter-bank horizontal dispersion in the remuneration of executives has any significant influence on bank performance. And two, to explore various situations with respect to board quality, agency cost, and government ownership under which the dispersion-performance nexus is moderated. The paper employs a two-step system GMM of (Blundell and Bond, Journal of Econometrics 8:115–143, 1998) to account for the possible endogeneity issues, and Driscoll–Kraay's non-parametric matrix estimator to account for cross-sectional dependence. The findings show that horizontal pay dispersion has a negative influence on bank performance. It produces evidence in favor of the "equity fairness theory" that higher pay dispersion would incentivize them to engage in excessive risk-taking for maximizing their personal interests, which emerges to be detrimental to the bank's performance. Further evidence of moderating effect shows that in the presence of effective board oversight, pay dispersion exerts a favorable influence on the performance of Indian banking firms. The research has significant policy ramifications for regulators to apprehend the undesirable implications of pay dispersion on bank performance and initiate quick action to scrutinize the governance practices of higher-paying banks. [ABSTRACT FROM AUTHOR]

Purpose – This study investigated the impact of corporate ownership structure on agency costs in the insurance industry. Design/methodology/approach – The study sample included 23 insurance companies listed on the Amman Stock Exchange (ASE) from 2010 to 2019. Panel regression was used to account for the firm- and time-specific unobservable variables and system-GMM estimation was used to address endogeneity concerns. Findings – The results show that managerial ownership positively (negatively) affects selling, general and administrative (SG&A) expenses (assets turnover), implying that unmonitored managers engage in activities that serve their own interests rather than those of shareholders. The largest shareholder’s ownership has no impact on agency costs, implying that the ownership of the largest shareholder is irrelevant. However, as the wedge between the percentage of capital owned by the largest shareholders and managers increases, SG&A expenses (efficiency ratio) decrease (increases), indicating that the existence of large non-management shareholders reduces agency costs. After accounting for the endogeneity problem, the impact of ownership structure on agency costs measured by asset turnover remains robust. Originality/value – To the best of the authors’ knowledge, this study is the first to provide unique evidence and useful insights into the determinants of agency costs from a frontier market in the Middle East and North Africa (MENA), with a focus on the insurance sector. Additionally, this study uses a new measure of separation between ownership and control by calculating the wedge between managers’ and large shareholders’ ownership. [ABSTRACT FROM AUTHOR]

Transit agencies in the US have shown great interests in the possibility of incorporating on-demand shared mobility modes into their fixed-route transit services. However, the cost-effectiveness of on-demand modes has not been clearly demonstrated, and there lacks an effective method for transit agencies to compare the costs of different service provision options. This study develops an economic-theory-based framework that appropriately conceptualizes the total economic cost of incorporating on-demand modes into transit. Based on the theoretical framework, a simulation model is built to operationalize an approach for evaluating the cost-effectiveness of transit-supplementing, on-demand mobility services. We demonstrate the applicability of this approach using Via to Transit program in the Seattle region. By accounting for both the service provider's cost and the users' cost, we obtain a more complete and accurate measure for the cost advantages of the on-demand modes in this case in comparison to expanding fixed-route transit, where the total economic cost for the on-demand mode is 22% lower than the fixed route transit. The theoretical framework and the simulation model can support the decision-making of public transit agencies as they explore incorporating mobility on demand to supplement traditional transit. • This paper conceptualized the economic cost of incorporating on-demand mobility into transit. • It built a simulation model to compare the cost-effectiveness of on-demand mobility with those of traditional options. • It applied this analytical approach to evaluate Via to Transit, an on-demand mobility pilot program in the Seattle region. • It measured more completely and accurately the economic advantages of the on-demand mobility in our case study area. [ABSTRACT FROM AUTHOR]

As a crucial component of internal corporate governance, remuneration controls possess the potential to influence the cash holdings of firms. However, identifying the causal relationship between these controls and such holdings presents a considerable challenge. To address this research gap, this paper leverages the implementation of China's Guidance on Further Regulating the Remuneration Management of Heads of Central Enterprises as a quasi-natural experiment to investigate the relationship between executive remuneration controls and firms' cash holdings, utilizing a double-difference approach. Based on an analysis of a sample of listed companies from 2007–2012, the results indicate that firms subject to regulated executive compensation exhibit lower cash holdings. To ensure the robustness of these findings, various statistical techniques such as parallel trend tests, variable replacement, propensity score matching, and placebo tests were employed. Additionally, a mechanism test was conducted, whereby the mediating effect of executive compensation controls on firms' cash holdings was examined, revealing a reduction in internal agency costs. Finally, the analysis of heterogeneity demonstrated that the impact of executive compensation controls on firms' cash holdings was more pronounced in companies with high-quality internal controls, stronger management oversight, and lower information asymmetry. [ABSTRACT FROM AUTHOR]

Currently, despite the increasing pressure on corporations to account for Environmental Social Governance (ESG) factors in their disclosures and actions, a lack of clarity on the meaning of ESG persists. ESG might be equivalent to stakeholderism, in which companies can sacrifice firm or shareholder market value to serve non-financial values. A second meaning would permit companies to pursue ESG only if it advanced the firm’s financial value. The second meaning poses no new challenges for corporate law. This Article will address how the lack of clarity on ESG makes it difficult to assess whether a provision in a contract of a firm mandating the pursuit of ESG would violate the mandatory fiduciary duties of managers. That lack of clarity might also render the provision unenforceable under contract law, even if corporate law typically defers to private ordering by firms. The ambiguity of an ESG-contract term governing management must be considered in conjunction with the central problem: that of addressing the ESG class of firm externalities. The relative analytics of deploying the agency contract-like fiduciary performance obligation, when contrasted with other private and interventional alternatives, to deal with firm externalities should be central to the analysis. Evaluating the inclusion of a mandated pursuit of ESG in a contract requires assessing not only whether ESG is a permitted objective of a corporation, but also, if ESG is a permitted objective, whether a contract provision would be enforceable and whether mandating the pursuit of ESG in a contract of a firm would best address the ESG class of firm externalities. Finally, would it impose hidden costs on the governance of firms that should be avoided? [ABSTRACT FROM AUTHOR]

Different areas of transactional practice, such as M&A or highyield bonds and sovereign bonds, vary in terms of the degree to which they are afflicted by agency problems. In some areas, clients are actively involved in deal making, and in others they are not present until well after the deal is done. If vulnerability to agency problems differs, and these agency problems impact the quality of contract production, one would expect those differences to appear when comparing contract production across practice areas. This Article compares one feature of contract production—the problems of encrusted and sticky boilerplate—across four different deal types where the degree of agency problems is likely to vary. We find that private equity M&A lawyers, who have the highest degree of client monitoring, innovate in order to repair problems in the deal documents more rapidly than do the other deal types. However, we also find that these private equity M&A contracts have more obsolete and encrusted terms than do corporate or sovereign bonds. [ABSTRACT FROM AUTHOR]

This paper performs a case study analysis of a deal (snowball swap) conducted by a state-owned transportation firm in Portugal. This deal lowered immediately the financing costs by 3 percentage points in the first 2 years and then it would cost an additive spread (snowball) if the Euribor interest rate crossed the barrier of 2% to 6%. The Euribor interest rate dropped to levels well below 2% and these contracts, which had a notional value of 80 million euros, had a cost of around 700 million euros. From the analysis of the contours of this business, it is possible to conclude that the corporate governance model of state-owned companies does not prevent situations of lack of independence of managers from the political power and this leads to a very short-term vision of these managers and creates adverse incentives for these managers. The paper concludes with a discussion of this case study implications for public policy on state-owned firms' governance. [ABSTRACT FROM AUTHOR]

This study is designed with the data of Interbrand for ranking top 100 global brands. In this study, the linkage between brand values and financial performance was estimated using different performance measures that include both stock market and operating performance using Fuzzy Set Qualitative Comparative Analysis (fsQCA) technique. The study investigates the effect of brand value on profitability and shareholder. It is observed that the firms that have superior operating performance result in greater brand valuation. Performance of firms measured through profitability is found to be a significant factor in brand valuation. Brand valuation is also found to be significant determinant of profitability. Thus, higher brand quality improves the likelihood of repurchases and in turn improved cash flows. Firms with high agency conflicts tend to have lower brand value. Higher market valuation positively impacts brand valuation in the context of lower leverage and agency costs. The linkage of brand value to firm performance is the justification for marketer's investments toward branding initiatives as a mechanism that creates value. This study is the first of its kind to examine the impact of agency costs on brand value using fsQCA technique to understand valuation impact of brands. To measure the effect of branding and marketing initiatives of the firms on financial performance, this study integrated both econometric and financial modeling. [ABSTRACT FROM AUTHOR]

The study is conducted to assess the impact of corporate governance on the firm performance and to study the mediating role of agency cost in the association between corporate governance and firm performance. 74 non-financial companies are selected as a sample for the study. The data from 2017 to 2022 is assessed in the study. Regression analysis is used to assess the direct impact of corporate governance on agency cost and firm performance. Mediation is assessed using Sobel Test. The finding of the study revealed that better corporate governance leads to better firm performance. Results also showed that stronger governance decreases agency cost which in turn leads to better firm performance. This study is unique in a way that it studied the mediating role of agency cost in the relationship between corporate governance and firm performance. The study will help the companies to recognize the importance of strong governance structure in order to increase financial performance. The study will also help to identify the role of agency cost on financial performance and to recognize that agency cost can be reduced via better corporate governance. [ABSTRACT FROM AUTHOR]

Based on the agency and stakeholder theories, effective boards, acting as an internal governance mechanism, reduce agency costs. This paper asks whether military connected boards represent a good governance tool by exploring how military connected boards affect stock price crash risk. Using instrumental variable analysis, we document that firms with military connected boards have lower risk of stock price crashes. Our findings are unlikely to have endogeneity concerns and shed light on the role of military connected boards as an effective internal governance tool. Consistent with the conservatism hypothesis and stakeholder theory, by being transparent about firm-specific bad news, military connected boards could effectively monitor managers to ensure they act on all stakeholders' interests. [ABSTRACT FROM AUTHOR]

This article studies the impact of stringent environmental regulation on the investment behavior of firms. Using panel data for Chinese listed firms from 2009 to 2018, we take the implementation of the new environmental protection law (NEPL) in 2015 as a quasi-natural experiment and identify its impact on reducing overinvestment of high polluting firms. Further, for the potential mechanism, we find that the reduction in agency costs and the decrease in the financing caused by NEPL can help to alleviate overinvestment problems. Considering the heterogeneity of firms, NEPL has a greater effect on state-owned firms and large-scale firms, which have serious overinvestment problems. Our empirical evidence strongly supports that NEPL can realize a win-win situation for the environment and the economy. [ABSTRACT FROM AUTHOR]

The purpose of this study is to investigate the impact of capital structure on the performance of firms listed on the Saudi Stock Exchange (Tadawul). The study employs a panel of 350 firm-year observations for 70 Saudi non-financial listed firms over the period 2016 to 2020. A generalised method of moments (GMM) estimation is employed to estimate models to enable hypothesis testing, thereby addressing any autocorrelation, heteroscedasticity and endogeneity issues. The results indicate that short-term debt, long-term debt, total debt and debt-to-equity ratios all have a significant negative impact on firm operational performance (return on assets), while long-term debt, total debt and debt to equity have such an impact on firm financial performance (return on equity) and market performance (in terms of Tobin's Q). This suggests that firm agency issues that lead to a high-debt policy may result in diminished firm performance. The results also show that increases in sales growth, the degree of insider ownership, and firm size and age in general positively impact firm performance, while asset tangibility and liquidity have a more ambiguous impact. The findings of the study are limited to listed non-financial Saudi firms over the period 2016–2020; the key results may be relatable to other developing country settings. Future research may be extended to investigate the effect of capital structure on firm performance on the wider Tadawul and to other capital structure and performance measures. The findings have practical implications for firm managers, which will help them to identify the firm-specific factors affecting the capital structure and choose the values that enhance optimal capital structure. This study result suggests that as debt financing can have a significant adverse effect on firm profitability, managers should moderate leverage in order to maximise shareholder wealth. Indeed, as debt is more costly than equity, managers should keep debt levels lower and instead focus financing at the margin on internal sources such as retained earnings and new equity, using external funding only as a last resort. The study results should provide policymakers with a better understanding of the relationship between corporate capital structures and performance, thereby underpinning future policy formulation. [ABSTRACT FROM AUTHOR]

Borrowing debt has impacted on the financing effect and governance effect of investment entities. Borrowing debt has become an important financing channel for the investment and construction of municipal infrastructure in China. In this paper, panel data from 2003 to 2018 in cities above the prefecture level in China are used to study the impact of borrowing debt on the efficiency loss of municipal infrastructure investment and construction. First, the results indicate that financing constraints have a greater impact than agency costs for the investment and construction of municipal infrastructure in China. Second, borrowing debt can effectively reduce the efficiency loss of municipal infrastructure investment and construction due to financing constraints. Third, the governance effect of borrowing debt is not very positive, but the rigid repayment of debt and interest to international banks will play some positive governance effects in the later stage. [ABSTRACT FROM AUTHOR]

Corporate governance theories suggest that concentrated ownership can be a mechanism for addressing the agency problem in a firm, and large shareholders matter for managerial decisions. Theoretically, the effect of large shareholders on innovation proxied by R&D is not determined yet, since their risk averseness and long-term time horizon affect R&D investment in opposite direction. It is quite unclear which effect is dominant. Thus, this issue should be explored by empirical evidence. The effect of ownership concentration on R&D investment is empirically examined by using firm-level panel data of Korea between 1980 and 2018. The empirical findings are: i) the effect of ownership on R&D is negative; ii) a bell-shaped relationship between ownership and R&D is observed; iii) the negative effect of ownership on R&D is found in old firms only; iv) the effect of ownership on R&D is positive for large firms and negative for small firms; and v) the effect of ownership on R&D is positive before the financial crisis. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to examine the effect of Board of Directors Effectiveness (BODE) on the performance of Malaysian Takaful companies licensed by the Central Bank of Malaysia. In addition, the study investigates the moderating effect of Shariah Committee Quality (SCQ) on the relationship between BODE and companies' performance. Design/methodology/approach: This study uses a sample of 11 Malaysian Takaful companies during the period of 2010-2017. While BDE and SCQ are measured using indices, performance is proxied using ROA and ROE. A panel fixed effect regression analysis is used to test the impact of the BDE on the financial performance of Malaysian Takaful companies and the moderator role of SCQ. Findings: The main finding of this study shows a positive association between BDE and performance. More specifically, boards with a high presence of independent, Muslim and female directors positively contribute to the performance of Malaysian Takaful companies. Another interesting finding is related to the positive moderating effect of SCQ on the relationship between BDE and performance. This result indicates that a high level of SCQ combined with a high level of board effectiveness improve performance. Practical implications: The finding is of great importance to stakeholders and policymakers to improve their board effectiveness and the quality of the Shariah committee to reduce agency costs and to improve the performance of Malaysian Takaful companies. Originality/value: This study adds to the prior literature by investigating for the first time the relationship between BDE and performance and the interaction effect of SCQ on the performance of Malaysian Takaful companies. [ABSTRACT FROM AUTHOR]

Cloud applications are becoming central and critical to the delivery of financial services. Despite their significance, banks face increased exposure to transaction risks related to the use of cloud services and internal and external pressures to improve their risk management practices. In this study, we use a unique data set from a bank's cloud register to examine the effectiveness of internal governance on an ongoing cloud outsourcing transaction between a bank and cloud service provider. We employ structural equation modeling and a simple linear regression to test for transaction misalignment and causes of governance inefficiencies. We find that a strong degree of misalignment is largely due to poor design of internal controls and a weak control system that does not provide acceptable indications of residual risk likelihood. The findings indicate that cloud risks are driven not only by agency costs, but also by firm-specific risks which contribute to a number of transaction uncertainties and governance misalignment. [ABSTRACT FROM AUTHOR]

This Article argues that the conventional wisdom about corporate raiders and activist hedge funds—raiders break things and activists fix them—is wrong. Because activists have a higher risk of mistargeting—mistakenly shaking things up at firms that only appear to be underperforming—they are much more likely than raiders to destroy value and, ultimately, social wealth. As corporate outsiders who challenge the incompetence or disloyalty of incumbent management, raiders and activists play similar roles in reducing “agency costs” at target firms. The difference between them comes down to a simple observation about their business models: raiders buy entire companies, while activists take minority stakes. This means that raiders are less likely to mistarget firms underperforming by only a slight margin, and they are less able to shift the costs of their mistakes onto other shareholders. The differences in incentives between raiders and activists only increase after acquiring their stake. Raiders have unrestricted access to nonpublic information after acquiring ownership of a target company, which allows them to look under the hood to determine whether changing the target’s business strategy is truly warranted. Activists, by contrast, have limited information and face structural conflicts of interest that impair their ability to evaluate objectively what’s best for the target company. This insight has profound implications for corporate law and policy. Delaware and federal law alike have focused on keeping raiders outside the gates, but they ignore the real threat: activists that are already inside. This Article proposes reforms to both state and federal law that would equalize the regulation of raiders and activists. [ABSTRACT FROM AUTHOR]

This article explores how participation in microfinance programs affects informal credit conditions. Using data on the rural credit market of Andhra Pradesh, I provide evidence that group lending participants obtain lower interest rates from the informal credit market. This result can be explained by two main factors. On the one hand, due to joint liability, group lending clients have high incentives to monitor each other, which implies a reduction in the agency costs for moneylenders. On the other hand, as microfinance borrowers are required to invest the credit in income generating activities, they face a lower default risk. Taken together, these two mechanisms may explain why microcredit borrowers are perceived as less risky by informal lenders. Overall, the findings suggest that moneylenders benefit from the duality in the market, thus providing empirical support to recent theoretical research hypothesizing that there is a complementarity relationship between formal and informal credit suppliers. [ABSTRACT FROM AUTHOR]

One of the key objectives of a pavement management system (PMS) is to find the optimal maintenance strategy, which minimises the sum of a road agency and user costs by maximising the net benefit to society. The PMS helps road agencies to better apply a selection of the right pavement treatments. The objective of the present paper is to show how the HDM-4 (Highway Development and Management 4) approach allows to develop a policy road leading to the optimal and robust selection of maintenance strategies under budgetary constraints, which minimises the sum of agency costs and road user costs in present value or maximises the net benefit to society over an analysis period. The findings could help road agencies to better apply the right pavement treatments. The present study is based on the exploitation of road network data, obtained from pavement structural condition survey and performed by the National Studies and Road Research Center. The study applies a long-term simulation (20 years) of maintenance budget needs under different budget scenarios. [ABSTRACT FROM AUTHOR]

This paper seeks to investigate the relationship between the level of debt structure heterogeneity and the cost of debt of publicly and privately held Brazilian companies in the period from 2020 to 2019. Debt structure heterogeneity is a relatively recent topic in the financial literature related to capital structure. As far as is known, the direct relationship between debt heterogeneity and the cost of debt has not yet been addressed in previous studies in the national and international literature. Research that broadens the knowledge regarding factors that attenuate the cost of debt is pertinent, especially in a context such as that of Brazil, in which high funding cost spreads end up compromising the economic viability of many projects and, consequently, the capacity for companies to generate value. The research results have impacts over the financial decision-making process, given the association identified between heterogeneity and debt cost, leading to reflections on the definition of a company's capital structure. Thus, it is closely related with firm value, whose maximization is the object of interest of managers and shareholders. Panel data regression models were estimated in which the dependent variable is represented by the cost of debt and the explanatory variables are represented by the heterogeneity level of companies' debt structure, which in turn is represented by two different proxies, aiming to give greater robustness to the results. The results are original and highlight the role of the debt structure in reducing the cost of debt. It is verified that the greater the debt heterogeneity, the lower companies' cost of debt. This relationship is even more intense for companies that are more susceptible to high agency costs. [ABSTRACT FROM AUTHOR]

This Article focuses on the power and corporate governance significance of the three largest index fund managers commonly referred to collectively as the "Big Three." We present current evidence on the substantial voting power of the Big Three and explain why it is likely to persist and, indeed, further grow. We show that, due to their voting power, the Big Three have considerable influence on corporate outcomes through both what they do and what they fail to do. We also discuss the Big Three's undesirable incentives both to underinvest in stewardship and to be excessively deferential to corporate managers. In the course of our analysis, we reply to responses and challenges to our earlier work on these issues that have been put forward by high-level officers of the Big Three and by a significant number of prominent academics. We show that these attempts to downplay Big Three power or the problems with their incentives do not hold up to scrutiny. We conclude by discussing the substantial stakes in this debate--the critical importance of recognizing the power of the Big Three, and why it matters. [ABSTRACT FROM AUTHOR]

This research foremost intention is to investigate the corporate governance structure effect on the firm's performance of the Indian-listed companies. The study was based on a six-year financial figure from FY 2014–2015 to FY 2019–2020 of Indian-listed companies on the Bombay Stock Exchange (BSE). The study applied the panel data statics model such as pooled OLS, fixed effect and random effect model, Hausman test and the Sys-GMM models for testing the study hypotheses. The study findings indicate that higher board size has a positive significant impact with the ROA, Tobin's Q on the firm's performance, and this helps in strengthen the decision-making process. Besides, the study results show statistically insignificant correlation among the ROA, EPS and NPM with the board independence. The results also reflected the positively correlation among the board meetings and the performance indicators of Tobin's Q, and these scenarios lead to that enhancement of corporate governance practices. Besides, the results negatively revealed correlation amongst the ROE, NPM and corporate governance indicators of CEO duality. The results of the study suggested that companies likely implement proper corporate governance practices leading to sophisticated effectiveness in firm's performance and minimize agency cost. The study attempted corporate governance issues with the several different measures and firm's variables other than using a single-measure context. Additionally, various model descriptions and statistical techniques are applied for analyzing the corporate governance structure and firm-related performance. [ABSTRACT FROM AUTHOR]

• We model subsidy policies on transport facility adaptation under incomplete information and ambiguity. • Incomplete information and ambiguity make the facility output, adaptation investment and social welfare downwardly distorted. • Two countervailing effects, the "pooling effect" and the "agency cost effect," jointly determine the downward distortions. • When the ambiguity is sufficiently high (or low, respectively), a complete pooling (or partial pooling, respectively) strategy is adopted. • Under ambiguity, a more optimistic government leads to a larger distortion on the regulation outcomes. This paper models subsidy policies on transport facility's adaptation to climate change-related disasters under the government's incompleteness and ambiguity of disaster information. We consider a transport facility (an airport or a seaport) that is in a vertical structure with an upstream facility operator and a few downstream carriers. The exact probability of disaster damage level is privately known by the facility operator, while the government has incomplete information and has to form a probability distribution. If the government cannot accurately perceive such probability (misjudgment), ambiguity emerges. This is the first modeling work to integrate the incomplete information and ambiguity in one framework to analyze the transport investment under uncertainty. Modeling results suggest that such incomplete information and ambiguity in many cases allow the facility operator to secure information rent, and make the facility output, adaptation investment and social welfare downwardly distorted (i.e., less than the levels under complete information). The ambiguity can bring two countervailing effects under incomplete information, namely the "pooling effect" and the "agency cost effect," which jointly determine the downward distortions on market outcomes and the welfare-maximizing subsidy policy. When its degree is low, the ambiguity causes a more dominant "pooling effect" that can help alleviate the distortion, improving social welfare. In presence of ambiguity, the increasing optimism of the government would deteriorate the distortion, likely to damage social welfare. Our analytical results provide support to subsidy on adaptation and policies to promote adaptation effectiveness and carrier competition in downstream market. To alleviate possible distortion, the government also needs to be cautious to reduce ambiguity through more information acquisition, and not be too optimistic on the disaster damage. [ABSTRACT FROM AUTHOR]

This article investigates whether the concentration of stock ownership affects the presence and intensity of covenants in the debt contracts of companies listed on the B3 stock exchange in the 2007-2018 period. We also present an overview of the presence and breach of covenants by these firms. For this purpose, we manually analyzed more than 4,000 explanatory notes for the firms' financial statements regarding loans and financing and then applied linear and nonlinear regression models. We found that greater ownership concentration is associated with higher likelihood of the presence of covenants, corroborating the role of the ownership structure as a substitute governance mechanism that allows for aligning interests and reduces the need for using covenants. The results are useful to managers, creditors, and shareholders, by showing which characteristics are determinants of the use of covenants, supporting management of factors that can reduce their occurrence, and bring greater flexibility to the corporate decision-making process, directly maximizing the value to shareholders. [ABSTRACT FROM AUTHOR]

This article presents a novel system reliability-based framework for multi-objective optimisation of preventive maintenance (PM) management of in-service asphalt pavement. To accurately predict the international roughness index (IRI) sequence of pavement sections, a long short-term memory (LSTM) neural network that considers the spatiotemporal correlations between IRI sequences is trained with data retrieved from the long-term pavement performance (LTPP) program. Based on time-dependent limit-state functions (LSFs) incorporating the uncertainty associated with LSTM neural network prediction and the observational error involved in IRI measurement, Monte Carlo simulation (MCS) with importance sampling (IS) is adopted to calculate the reliability of pavement sections. Pavement sections located in New Mexico and Montana are selected as illustrative examples. Tri-objective optimisation processes are investigated by maximising user benefits (i.e. improved system reliability) and agency benefits (i.e. extended service life) while minimising the associated life-cycle cost (LCC) (i.e. user and agency costs) with multi-objective genetic algorithms (GAs). The obtained Pareto solution sets may assist decision-makers in the selection of well-balanced solutions to identify the optimal timing for applying PM treatments to in-service asphalt pavement. [ABSTRACT FROM AUTHOR]

For the last few years, the special purpose acquisition company--SPAC--was one of the hottest investment trends on Wall Street. In a SPAC, an investment vehicle with a limited lifespan (usually two years), a sponsor raises money from investors up front with the goal of finding a target company to take public via a reverse merger with a publicly traded shell company. Once touted as a democratized way to access public markets that avoids the rigors associated with traditional initial public offerings (IPOs), those characterizations came under fire in 2021 as academics and regulators spotlighted the hidden costs and misaligned incentives that the SPAC structure precipitates. As a one-time deal that allows investors to opt out of a proposed merger, the SPAC lacks the "reputation" component that underpins private equity relationships by constraining agency costs and opportunism. Enter the special purpose acquisition rights company--the SPARC--a reconceived SPAC model that would allow investors to opt in when the sponsor identifies a good deal. This Note highlights how the SPARC promises to reintegrate the reputational component that the SPAC lacks by facilitating repeat deals and reframing the sponsor-investor relationship as a long-term one. For the SPARC model to become a reality, the Securities and Exchange Commission (SEC) needs only to pass a rule proposed by the New York Stock Exchange (NYSE) that would enable SPARC sponsors to issue tradeable Subscription Warrants before raising capital. Instead, the SEC issued a raft of proposed rules intent on killing the SPAC, prompting the NYSE to withdraw its proposal. This Note calls for the SEC to scrap the bulk of its proposed SPAC rules in favor of a revised rule allowing the issuance of Subscription Warrants for compensation that incorporate an oversubscription privilege to match investor appetites with target company funding needs. [ABSTRACT FROM AUTHOR]

Using a sample of Chinese local listed state-owned enterprises (SOEs) from 2008 to 2020, we find that provincial State-owned Assets Supervision and Administration Commission (SASAC) leaders' work experience at local companies significantly improves local SOEs' investment efficiency. This effect is stronger for local SOEs with shorter pyramidal layers and those in regions with weak institutional environments. Moreover, mechanism tests show that provincial SASAC leaders' work experience at local companies improves local SOEs' investment efficiency by decreasing agency costs and weakening policy burdens. Overall, our study highlights the important role of regulators' characteristics in determining the investment efficiency of SOEs. • Provincial SASAC leaders' work experience at local companies significantly improves local SOEs' investment efficiency. • This effect is stronger for local SOEs with shorter pyramidal layers and in regions with a weak institutional environment. • Agency costs and policy burdens are channels through which such work experience improves local SOEs' investment efficiency. [ABSTRACT FROM AUTHOR]

In this study, we investigate how economic policy uncertainty (EPU) influences corporate tax avoidance using a dataset of listed firms from 22 countries spanning 1999 to 2019. Our findings align with the agency motive, showing that as EPU increases, firms tend to decrease their tax avoidance practices. Further analysis reveals that this negative relationship is particularly strong among unconstrained firms. We also observe that strong firm-level governance is associated with reduced tax avoidance during periods of heightened EPU. Furthermore, we investigate how institutional characteristics at the country level influence the relationship between EPU and firms' tax avoidance strategies. We find that firms in countries with strong governance, situated in developed economies, and adhering to stringent auditing standards are less inclined to engage in tax avoidance amid increasing EPU. Conversely, firms in countries with low GDP per capita, low governance scores, and located in emerging economies demonstrate a positive association between tax avoidance and EPU. Overall, our research highlights EPU as a key driver of corporate tax management, offering policymakers valuable insights into its potential impact on tax planning. • EPU and tax avoidance are negatively associated. • Less tax avoidance during the periods of rising EPU is to reduce agency issues • Firm-level and country-level governance can reduce tax avoidance during uncertain times [ABSTRACT FROM AUTHOR]

The growing use of public-private partnerships (PPPs) in infrastructure delivery has rekindled the public versus private cost-of-capital debate. Early debate concluded that the social cost of public-sector capital is below that of private capital because risk can be spread across numerous taxpayers. Intervening research focused on the agency costs that arise due to increased separation between equity holders and managers and the various mechanisms to control those agency costs. We analyze differences in public versus private residual claims and their associated agency costs. We conclude that earlier discussions that omitted agency-cost analysis should be revisited. [ABSTRACT FROM AUTHOR]

Existing bridge performance metrics are limited in their ability to objectively reflect the safety and serviceability of bridges and identify effective Maintenance, Repair and Replacement (MR&R) actions for a large number of bridges in the face of budget constraints. This study presents a comprehensive optimal budget allocation framework with an integer linear programing formulation for a portfolio of bridges based on element-level inspection data. Considering budget constraints, this method determines optimal MR&R actions at element-level such that agency and user costs of repair actions required to have bridges in their like-new state at the next budget allocation year are minimized. The framework incorporates structural safety risks via the probability that the designated structural functionality of a bridge is or deemed to be compromised. The approach is applied to 484 National Highway Systems bridges in district 3 of Ohio. Results indicate that the proposed method can identify work plans comprising the optimal set of MR&R actions that maximize the network-level performance of bridge portfolios, while satisfying budgetary constraints. It is observed that this method consistently assigns higher priority to work plans that reduce structural safety risks of bridges, and to bridges with high traffic demands and long detour lengths. [ABSTRACT FROM AUTHOR]

The influence of risk and return on debt policy, agency costs, and firm value in Indonesian public companies is investigated in this study. The research is based on quarterly data from companies in the LQ45 index. There are 180 observations in all. Partial Least Squares Structural Equation Modeling is used to analyze the data (SEM-PLS). The data analysis demonstrates that the company's sales decreased during the COVID-19 pandemic, resulting in an increase in risk and a decline in the company's return. Even though the company's agency charges have failed to increase the sales value, the company's debt is nevertheless covered by its assets and capital. More findings will be presented in-depth. The findings might help researchers identify characteristics that impact business values. These characteristics may then be utilized to identify which strategies and policies a management team should employ to maintain a company's value. [ABSTRACT FROM AUTHOR]

Listed companies in China’s Shanghai and Shenzhen stock markets are selected as research objects, the influence of executives’ synergy allocation of parent and subsidiary companies on green governance level of subsidiaries is investigated. Using the 3100 sets of sample data formed from 2014 to 2017, then tested the hypothesis empirically through multiple regression analysis using STATA 15.1. The results show: (1) Executives’ synergy allocation of parent and subsidiary companies has a positive impact on green governance level of subsidiaries; (2) The moderating effect of equity checks and balances and the property rights nature of enterprise groups is verified, the specific performance is: the lower the equity checks and balances, the stronger the positive influence of the executives’ synergy allocation of parent and subsidiary companies on green governance level of subsidiaries; (3) Compared with state-owned enterprise groups, the influence of executives’ synergy allocation of parent and subsidiary companies has a stronger impact on green governance level of subsidiaries in private enterprise groups; (4) Further analysis shows that part of the reason for the positive impact of executives’ synergy allocation in parent-subsidiary companies on the green governance level of the subsidiaries is that executives’ synergy allocation has alleviated the first type of agency costs to some extent. [ABSTRACT FROM AUTHOR]

• A Schumpeterian growth model with distance to frontier is developed. • Financial intermediaries save information costs through delegation yet incur agency costs. • Investors thus face a tradeoff between the information and agency cost. • Saving the information costs dominates in the early stages of development. • Economic development is accompanied by a gradual switching from financial intermediaries to markets. This paper studies endogenous change of financial institutions in a Schumpeterian endogenous growth model with uncertain innovation outcome. Technological progress can result from either imitation or innovation. Information about each innovative project can be acquired by paying a fixed cost. Financial intermediaries save the information cost through delegation yet incur an agency cost that results from diversity of opinion. Investors thus face a tradeoff between the information and agency cost. Because the information and agency cost is proportional to the technological frontier and the local technology level respectively, saving the information cost dominates in the early stages of development when the distance to frontier is large. In contrast, avoiding the agency cost dominates as the local technology level approaches the frontier. As a result, economic development is accompanied by a gradual switching of financial structure from intermediaries to markets. [ABSTRACT FROM AUTHOR]

Road agencies employ different criteria and methods to compare treatment alternatives and develop maintenance and rehabilitation (M&R) programmes for their networks. The maximisation of benefits has been integrated in several leading pavement management systems and used for network-level programming since the 1980s. The approach defines benefit as the area between the performance curves with and without M&R actions based on an aggregated index, representing the overall pavement condition. Further simplifications like the screening of solutions using an efficiency frontier and the incremental benefit–cost technique have made it possible to apply the method with the available computing power at the time. Based on a case study of 1000 road sections, this paper analyses the effect of benefit maximisation on annual budget, network condition, treatment selection, trigger values and remaining life. M&R programmes minimising costs and maximising benefits are compared at the project and network level for various budget scenarios. The results show that the maximisation of benefits based on an aggregated condition index leads to substantially higher agency costs and favours the selection of expensive treatments with earlier timing, irrespective of actual failure causes. The conclusions of this work may be useful to road agencies in developing more efficient budget-allocation polices. [ABSTRACT FROM AUTHOR]

The Photovoltaic industry promotes the transformation of China's energy structure to green and low-carbon, which is of great significance to achieve the goal of "Carbon Peaking and Carbon Neutrality." At present, the industry is mainly faced with problems such as the drastic reduction of government subsidies and the difficulty of financing. From the perspective of independent auditing, our paper takes 54 A-share listed photovoltaic companies in China from 2011 to 2020 as the research object to study the impact of audit quality on financing efficiency, and the role of agency costs in the relationship between audit quality and financing efficiency.The results show that audit quality is positively related to financing efficiency. For every 1% increase in audit quality, the financing efficiency will increase by 13%. In addition, agency cost plays an intermediary role between audit quality and financing efficiency. For every 1% increase in audit quality, agency cost can be reduced by 34% and financing efficiency can be increased by 25%. [ABSTRACT FROM AUTHOR]

Through a proprietary dataset of listed firms on the Shanghai and Shenzhen Stock Exchanges, we establish a positive link between firms' financial technology (Fintech) business and their corporate social responsibility (CSR) practices. Such a link can be more pronounced among firms of stronger political connections, lower agency costs, and better internal control. Enhanced supply of bank loans, internal capital market, public scrutiny, and firms' strategic differences are underlying the link. Fintech business may also effectively curb firms' corporate social irresponsibility (CSI) behaviour. Fintech business may have become a strategic endeavor to sustain long-term economic growth in the digital age. • Fintech business positively contributes to firm CSR practices. • The impact is strengthened by political connections, lowered agency costs, and internal control. • Bank loans, internal capital market, public scrutiny, and strategic differences are underlying elements. • Fintech business also curbs corporate social irresponsibility behaviour. [ABSTRACT FROM AUTHOR]

Road network requires timely maintenance to keep pavement surface in good condition for reduction of fuel consumption with the limited budget. This study focused on development of pavement preservation strategies in the road network considering multi-objective optimization of agency cost and environmental impact (in terms of CO2 emission). Field data from long-term pavment performance (LTPP) database were used to quantify the impact of pavement preservation treatments (crack seal, chip seal, and thin overlay) on the changes of surface roughness. The emission rate functions of vehicles with respect to speed and pavement surface condition were developed using Motor Vehicle Emission Simulator (MOVES) with the updated tire rolling resistance coefficients. The multi-objective optimization problem was solved using the Simulated Constraint Boundary Model (SCBM) method. The final solution was recommended based on the minimized distance from the utopia point to the Pareto front. The results show that the optimization solutions are affected by the available budget, existing pavement condition, truck traffic, and unacceptable level of pavement roughness. For multi-objective optimization of minimizing both agency cost and CO2 emission, the recommended preservation treatments among different segments is a combination of crack seal and thin overlay in most cases. These findings can be used by highway agencies to make road maintenance decisions considering the tradeoff between agency cost and environmental impact. [ABSTRACT FROM AUTHOR]

Modern enterprises often operate as interconnected groups of companies. This is facilitated by various cross-entity liability arrangements, which aim at risk mitigation and control, and may contribute to the reduced agency cost of debt. However, they pierce limited liability (cross-guarantees) or impose correlation between the fates of separate entities (intercompany cross-defaults and ipso facto clauses). They can promote group exposure and disincentivise debtors from taking early actions to avoid insolvency. This paper explores the tools that are embraced to address these problems to achieve group restructuring. They include restrictions of cross-entity ipso facto clauses and extension of enforcement stays to group entities. I examine the ex ante and ex post effects of group liability arrangements, make a comparative overview of national law responses and suggest recommendations to find a balanced approach to cross-entity liability arrangements, enhance the existing legal regimes and form the basis for future reforms of insolvency laws. [ABSTRACT FROM AUTHOR]

• Impact of vehicle automation and electrification on the feeder transit design. • Two operating strategies, fixed routes versus door-to-door trips, are compared. • Variations of the cost structure of the service define different scenarios of study. • Automation presents the main impact on the applicability of door-to-door trips. • Significant impacts require mature technologies, small areas and high values of time. This paper evaluates the impact of vehicle automation and electrification on the applicability of fixed routes and door-to-door services to supply a feeder transit solution in suburban areas. These technologies will modify the current cost structure of the bus system depending on how mature they are, reducing operating costs and increasing capital costs. By means of a continuum approximation model, we evaluate the performance for users and agency of the two feeder strategies in different scenarios of technological development. The results show that automation has the main impact on the applicability between the two feeder alternatives while the effects of electrification are considerably smaller. The future applicability of door-to-door trips reaches wider ranges, although this change is especially significant under some circumstances of technology, service area and users. The expansion of this range is relevant in case the automated bus is mature enough (high reduction of operating cost and low vehicle acquisition price), the areas are small, the trips are short and the value of time is high. However, the results reveal that fixed routes will remain a competitive feeder solution in a wide range of scenarios. We identify that the demand density threshold grows sharply in front of any reduction of agency costs once its value is around 200–300 pax/km2-h. Therefore, flexible services will gain applicability especially in environments that allow reaching this threshold. [ABSTRACT FROM AUTHOR]