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Outsourcing, which has become an important employment strategy, is of increasing interest in both management theory and practice. This paper investigates the determinants of outsourcing from the perspective of CEO overconfidence using manually collected outsourcing data from Chinese A-share listed companies for the period 2012–2020. The empirical results show that firms with overconfident CEOs are more likely to adopt outsourcing strategies, and the asset specificity mitigates the positive effect of CEO overconfidence on outsourcing decisions. Furthermore, we find the moderating effect of asset specificity occurs mainly in private firms rather than SOEs and in large firms rather than small firms. Our results indicate inefficiencies associated with overconfidence should be classified as honest mistakes rather than deliberate actions, and strong corporate governance mechanisms help overconfident CEOs avoid making honest mistakes. [ABSTRACT FROM AUTHOR]

This study investigates whether directors' and officers' liability insurance (D&O insurance) misleads creditors' lending decisions by examining its effect on corporate debt maturity structure. We find that purchasing D&O insurance leads to increased corporate debt maturity, and this effect is more pronounced for firms with weaker corporate governance. These results suggest that creditors may view D&O insurance as an external monitoring tool that helps improve corporate governance. However, D&O insurance induces higher firm risk, but cannot help decrease agency costs or improve firm performance, that is, it results in more severe managerial opportunism. Our findings suggest that D&O insurance, to some extent, misguides creditors' lending decisions. [ABSTRACT FROM AUTHOR]

The advent of the digital economy has ushered in unprecedented opportunities for corporate development. Utilizing a comprehensive data set comprising Chinese listed companies spanning the period 2011–2020, this study empirically examines the impact of digital transformation on corporate illegality. The findings reveal a significant reduction in corporate illegality attributable to digital transformation. This empirical result retains its significance even when subjected to a battery of robustness tests. In terms of the underlying mechanisms, this paper conjecture that digital transformation reduces the internal and external information asymmetry, thereby curbing corporate illegality. Further heterogeneous analysis shows that digital transformation is more effective among corporates with higher agency cost (state‐owned or large corporates) or corporates located in regions with lower degree of marketization level. These heterogeneous effects provide supportive evidence to the above conjecture. The implications of this study extend the boundaries of digital transformation research and furnish novel and actionable insights into the prevention of corporate illegality. [ABSTRACT FROM AUTHOR]

This paper investigates the interrelationship between institutional investors' information competition, accounting information transparency, and corporate governance in the context of Chinese A-share listed companies from 2008 to 2020. Institutional investors are considered informed traders due to their access to valuable information and professional research teams. They play a critical role in reducing information asymmetry between listed companies and investors, influencing investment decisions. Previous research has primarily focused on the impact of institutional investors' shareholding on accounting information transparency, but less attention has been paid to the influence of their information competition. This study addresses this gap by examining the competition among institutional investors to acquire exclusive information and the effect on the transparency of corporate accounting information. The study finds that when information competition is low, institutional investors with larger shareholdings tend to decrease the transparency of financial information to gain a private information advantage. Additionally, the paper explores the mediating factors that influence the quality of management disclosure, which is affected by institutional investors. The research contributes to the understanding of institutional investors' information competition, accounting information transparency, and corporate governance. It reveals that agency cost is a critical linkage factor for institutional investors to influence accounting information transparency to obtain an information competition advantage. It also highlights the impact of stock liquidity and non-Big Four independent audits on the degree of information asymmetry resulting from information competition. Furthermore, the paper suggests that the competitive rivalry between institutional investors determines their tendency to disrupt the market information environment and increase information asymmetry to gain private information advantages. This behavior contradicts the concept of developing institutional investors to foster a healthy and orderly capital market in China. The paper emphasizes the need for regulators to guide and regulate the market behavior of institutional investors. [ABSTRACT FROM AUTHOR]

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Purpose: Given South Africa's expanding salary inequality, combined with excessive risk-taking by bank executives, this study investigated whether banks' chief executive officer (CEO) remuneration is justified, by the performance of the banking institution. Design/Methodology/Approach: This study used panel data analysis to determine if there is a long-term relation between CEO remuneration and company performance, in the South African banking sector. Research limitations/Implications: The detailed analysis, spanning 2009-2021 considered market- and accounting performance, to measure company performance. Agency theory and optimal contract theory were used to consider the historical and current tendency in CEO remuneration, including King IV and its "say-onpay" provision. Findings: This study found a long-term relation between CEO total remuneration and company performance in the South African banking sector, but not between CEO short-term and long-term remuneration and company performance. Originality/Value: The result of this study offers a better understanding of the relationship between CEO remuneration and company performance in the South African banking sector. [ABSTRACT FROM AUTHOR]

An agency problem is defined as a conflict of interest arising due to a misalignment of interests among the managers and other stakeholders of the company. This article aims to review the articles addressing the agency problem and their impact on business performance. This article reviews the contributions of prominent theorists on agency problems and agency costs. Using bibliometric attributes of 740 articles from the Scopus database, this study highlights the publishing trend and outlets, along with leading contributors and collaborators in terms of authors, institutions, and countries. This study identifies the clusters through the bibliographic coupling technique and a trend topics analysis. Most researchers have focused on corporate governance and expressed the agency problem as one of the impact areas. This study is unique as no study to date specifically focuses solely on agency theory or the agency problem through the lens of bibliometric analysis. Future research directions on agency problems and their solutions conclude this study. [ABSTRACT FROM AUTHOR]

In this study, we explore the impact of ownership structure on a firm's earnings quality in emerging markets. Using the Chinese manufacturing industry sample set, we demonstrate that higher profitability performance could increase earnings quality. Higher concentrated shareholding and institutional shareholding reduce information asymmetry and improve external monitoring, improving earnings quality. Well-studied independent board members do not improve but contribute negatively to earnings quality. Such a result may be due to the lack of variation in the number of independent board members in each list of firms. Almost all firms choose to have three independent board members. Finally, bond debt increases asset size and agency costs; the impact of bond debt on earnings quality is negative. When considering the interaction between bond covenants and external monitoring, including independent board members and institutional shareholdings, the interactive effects reduce the negative effect of the bond debt on earnings quality. This study contributes to discovering that both direct and indirect monitoring of ownership structure contributes to the firm's management and provides some useful insight to reduce agency costs. [ABSTRACT FROM AUTHOR]

This paper aims to examine the effect of dividend regulation on cost stickiness (i.e. the asymmetric change in firm expense between sales increase and sales decrease) and explore the underlying mechanism. Based on the quasi-natural experiment of the Guideline for Dividend Policy of Listed Companies issued by the Shanghai Stock Exchange (SSE) in 2013, the authors employ a difference-in-difference model to investigate the impact of dividend regulation on cost stickiness. The authors find that the cost stickiness of treatment group firms has decreased significantly when compared with control group firms after the dividend regulation. Moreover, this effect is more pronounced among firms in lower marketization regions, in lower competition industries and those with less analyst coverage and lower cash flow levels. Further analyses show that dividend regulation reduces the cost stickiness of firms by mitigating agency problems. Finally, the conclusion holds after several robust tests, including controlling for firm fixed effect, propensity score matching (PSM), placebo test and reconstruction of expense variable. This paper confirms that dividend regulation serves an important role in corporate governance, which reduces firms' agency costs and thereby decreases cost stickiness. The conclusions shed light on the dividend policies of listed companies and capital market regulation in the future.

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]

The present study endeavours to perform a systematic review of the literature related to the impact of corporate governance on dividend policy in the last two decades. This study uses the systematic literature review process . 143 articles were identified initially and subsequently further narrowed down to 66 most relevant articles for the scope of this study. This paper critically examines the influential studies in the literature related to the impact of corporate governance on dividend policy. The literature review related to corporate governance is analysed from two broad perspectives i.e. (a)Impact of Shareholder protection on dividend pay-out and (b) Impact of Controlling stakeholders on dividend pay-out. Our findings are as follows. Firstly, a vast majority of studies have found a positive relationship between better corporate governance practice and higher dividend pay-out. Secondly, the study finds that the majority of the research has been done in the USA and Europe while limited studies have focussed on emerging markets. Finally, our reviews show that there is a dearth of studies that evaluate the impact of the structural changes in corporate governance in various emerging markets. This study contributes to the extant literature in several ways. It highlights the research gaps in this field and provides a potential agenda for academicians and research organizations for future research.

With the separation of ownership and management, the corporate governance system is a good tool in the hands of shareholders to reduce agency costs. Developing the literature in which agency cost is calculated by the absolute amount of cash flow or its interaction with growth opportunities, we measure it with a model-based approach. The second innovation is the adjustment of Tobin's Q with inflation. Agency costs have been measured in 6 different proxies and their impactability from corporate governance has been analyzed with the mediating role of debt and dividend ratio. The data of companies listed on the Tehran Stock Exchange and Iran Fara Bourse except for financial intermediary companies in the period 2006 to 2020 have been analyzed using structural equations modeling and due to the non-normality of data, its variance-based approach, partial least squares (PLS) method is used. According to the results in all models based on one of the 6 proxies of agency cost, corporate governance has a positive effect on the dividend ratio and secondly, the debt ratio reduces agency costs. In the model-based approach, unlike other measures of agency costs, the path of corporate governance on dividend and dividend on agency costs was confirmed. Because of the impact of the debt ratio on model-based agency costs, shareholders must adjust the debt ratio leading to lower agency costs. [ABSTRACT FROM AUTHOR]

This paper examines the impact of product market competition on the dividend policy of Indian firms. We have taken product market competition as the proxy of external corporate governance. This study has used 1142 non-financial, non-utility, and non-government Indian firms listed in NSE from 2001 to 2018. For the purpose, five different product market competition and three various dividend measures were employed. Also, the interaction between product market competition (external) and board corporate governance (internal) on dividend policy was examined using a newly developed board corporate governance index (BCGI). The findings suggest that non-competitive firms are more likely to pay higher dividends than competitive firms. Non-competitive firms face more significant agency problems and therefore, pay higher dividends than competitive firms. Finally, the study found that the influence of internal corporate governance on dividends to be much higher and significant in the case of non-competitive firms compared to competitive firms. Overall, the findings of this study offer consistent evidence that external corporate governance and dividend policy are substitutes, and higher agency costs and higher internal governance strengthens this relationship. The outcomes of this study can help the managers to more precisely take dividend decisions by looking at the competition level in the market. The results suggest that managers should pay less dividends when firms operate in a high-competitive industry and vice-versa. The policymakers should design corporate governance norms after considering the competitiveness of the industry. [ABSTRACT FROM AUTHOR]

Using a large sample of firms with corporate governance ratings over the period 2004–2010, we propose that a firm's governance level depends on the balance between private benefits and the career value of top managers. We find an apparent improvement in the corporate governance quotient (CGQ) when there is a shock to managers' career value. However, a significant proportion of firms that initially improve their CGQ subsequently reverse these governance changes; a later reduction in external pressure is positively associated with CGQ reversal. Finally, stock market investors are fooled by temporary governance improvements. [ABSTRACT FROM AUTHOR]

This study investigates the association between CEO perquisites and bank loan spreads. We collect detailed data on CEO perquisites from the proxy statements of S&P 500 firms between 1993 and 2015 to study this issue. The empirical evidence supports the agency cost view that the lending banks demand significantly higher returns (spread), more collateral, and stricter covenants from firms with higher CEO perquisites. We further confirm that the effect of these perquisites remains after we control for various corporate governance and agency cost factors. We conclude that banks consider CEO perquisites as a type of agency cost when they make lending decisions. [ABSTRACT FROM AUTHOR]

Using large reductions in import tariffs as an exogenous shock to the competitive environment, this paper examines how an increase in foreign competition affects the importance of corporate governance. Consistent with prior studies, weak governance is associated with lower firm value, lower operating performance, lower labor productivity, higher capital expenditures, higher non-production expenses, and higher wages in the absence of increased competition. However, the differences between weak and strong governance firms along each of these dimensions are reduced or eliminated after a tariff cut. The effects are concentrated among firms in previously noncompetitive industries, defined as having sales concentration above the median or import penetration below the median in the year before the tariff cut. These conclusions are supported through the use of multiple alternative measures of operating performance and corporate governance. Altogether, the evidence indicates that an increase in competition can mitigate agency costs and serve as a substitute for traditional corporate governance mechanisms. [ABSTRACT FROM AUTHOR]

In this paper, the effect of agency cost on the relationship between corporate governance and cost of equity capital is studied. The models for testing hypotheses are multivariate regression model from Chen et al (2011) study. For this purpose, the related data of the listed companies in Tehran Stock Exchange was utilized from the periods 2009 to 2015, including 140 companies. The results show an inverse relationship between corporate governance and cost of equity capital. This means the companies that have better governance system, will have lower financing costs and the investors demand lower yields from them. Indeed if agency cost becomes lower, real investor has more confidence, thus more financial capital is provided for companies. Also the amount of agency costs and the investment opportunities have effect on the relationship between corporate governance and cost of equity capital.

This study uses the “cost of carry” (CoC) measure to identify the motive for corporate cash holdings. Based on the historical, moving-average holdings of currency and liquid assets, the measure represents the net opportunity cost of corporate demand for money. This study finds that large manufacturing firms in the U.S. park their capital in short-term assets appealing to the agency motive for cash holdings. Because dividend-paying firms can choose to distribute their capital to equity shareholders when their investment opportunities are unfavorable, these firms might show a non-positive association between capital expenditure and the CoC measure, championing the transactions motive. Still, dividend-paying large firms exhibit an overall positive correlation, suggesting that they park their capital on the agency motive. A detailed literature review and discussions are followed.

Every business entity has a common goal of achieving sustainable development, particularly in the areas of growth and profitability indices. Earnings manipulation by corporate managers may hinder the attainment of this lofty target. The study examined the relationship between corporate board attributes and earnings management in Nigerian banks for the period 2009-2018. The dependent variable (earnings management), was derived using modified Jones model's discretionary accruals, while four corporate board attributes (size, independence, gender diversity and board meetings) served as independent variable. The Random effect generalised least square regression results reveal a negative and significant relationship between board size, board independence and earnings management. Board gender diversity and board meetings, however, have no significant association with earnings management. It is recommended that corporate governance legislation should support large number of directors (subject to a manageable size) and more of external directors sitting on corporate boards. [ABSTRACT FROM AUTHOR]

Corporate governance plays a significant role in eliminating agency costs. Corporate boards have the main role of monitoring the management; they help in aligning the interests of principals and agents. Boards are responsible for care and diligence that brings financial control, so that profitability can be ensured in the corporate firms. This paper focuses on reviewing the literature on board structure extensively. This paper reviews many aspects of board structure, i.e. board size, board meeting frequency, board independence, board ownership and composition, board education, audit committee, and so on. Further, this paper furnishes the type of board structure that will contribute towards increasing firm performance, thereby helping in mitigating agency costs. This research study uses a descriptive research design. Random sampling is used while selecting different kinds of literature review of board structure. This study takes the 1991-2019 time period for reviewing of literature. The period is selected based on convenience sampling. The results depict that reasonable frequency of board meetings, the board size, independence of directors, well-educated board members, audit committee, board composition, and ownership make a positive impact on firm performance, thereby reducing agency costs. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to investigate the effect of corporate governance quality and ownership structure on the relationship between the agency cost and firm performance. Both the fixed-effects model and a more robust dynamic panel generalized method of moment estimation are applied to Chinese A-listed firms for the years 2008 to 2016. The results show that the agency-performance relationship is positively moderated by (1) corporate governance quality, (2) ownership concentration, and (3) non-state ownership. State ownership has a negative effect on the agency-performance relationship. Various robust tests of an alternative measure of agency cost confirm our main conclusions. The analysis adds to the empirical literature on agency theory by providing useful insights into how corporate governance and ownership concentration can help mitigate agency-performance relationship. It also highlights the impact of ownership type on the relationship between agency cost and firm performance. Our study supports the literature that agency cost and firm performance are negatively related to the Chinese listed firms. The investors should keep in mind the proxies of agency cost while choosing a specific stock. Secondly; the abuse of managerial appropriation is higher in state-held firms as compared to non-state firms. Policymakers can use these results to devise the investor protection rules so that managerial appropriation can be minimized. [ABSTRACT FROM AUTHOR]

Commercial banker‐directors (CBDs) bring both financial expertise in risk management and conflicts of interest between shareholders and debtholders. The burgeoning literature on stock price crash risk generates important questions of whether CBDs reduce crash risk. Using BoardEx data from 1999 to 2009, we find supporting evidence that the firms with CBDs experience lower stock price crash risk. Moreover, the reduction of crash risk is more pronounced for high‐risk firms under the monitoring of affiliated banker‐directors. The results of this study are robust to the Heckman selection model, propensity score matching, and alternative measures of crash risk. [ABSTRACT FROM AUTHOR]

This study examines the impact of corporate governance, reflecting a wide spectrum of board characteristics and ownership structure on agency costs in 281 listed companies on Ho Chi Minh Stock Exchange (HOSE) in Vietnam in the period 2013--2018. For this purpose, three board characteristics were chosen: (1) the size of board of directors, (2) equilibrium between non-executive and executive members of the board of directors, (3) theCEOchair duality and three types of ownership structures were chosen: (1) management ownership, (2) government ownership, (3) foreign ownership. An inverse proxy of agency costs is used: asset utilization ratio (asset turnover), which reflects the managerial efficiency. The research methodology includes three statistical approaches: Ordinary least squares (OLS), fixed effects model (FEM) and random effects model (REM) are considered to employ to address econometric issues and to improve the accuracy of the regression coefficients. The results can create effective corporate governance mechanisms in controlling the managerial opportunistic behavior to lower agency conflicts, and hence lower agency costs. [ABSTRACT FROM AUTHOR]

Mutual fund has become an increasingly important investment vehicle for retail investors, especially among households. Besides developing the institutional investment as an efficient momentum trader, the long-established separation of ownership and control in contemporary type of fund management has very much caused depreciation in shareholder value under minimum investor protection environment. The unobserved activities and widely magnitude decision skills of managers under imperfect contract with the tendency to serve self-interest exacerbates the shareholder wealth, predominantly in Shariah mutual fund (SMF), pertaining to dual investing interests. This paper reviews the theoretical and empirical literature with central attention given to the existing governance structure, Shariah governance in religious based fund, and some other related internal governance mechanisms. Concurrently, the review explains theoretically and conceptually the interrelationships among all relevant governance mechanisms. After some rigorous discussion and argument, this paper recommends further empirical investigation into this line of research to integrate the gap from developed market evidence.

In this study, it is aimed to reveal the relationship between the agency cost and board structure of 18 manufacturing industry within the BİST corporate governance index firms between 2006 and 2016. Agency cost is represented with free cash flow and growth opportunity ratio, the board size, number of independent members and CEO duality are represented board structure. According to the empirical results, there is a negative relationship between the board size and agency costs, a positive relationship between the number of independent members and agency costs. However, there is no significant relationship between the CEO duality and the agency costs. The results revealed that the board structure has a significant impact on firms' agency costs. [ABSTRACT FROM AUTHOR]

We posit that lender monitoring increases the general outcomes of borrowers' tax avoidance while reducing opportunistic tax aggressive behaviors. We identify four lender related monitoring measures that could affect borrowers' tax planning. We find firms with a larger portion of loan shares held by lead lenders, with loans led by reputable lenders, and with a single lending relationship to have more tax avoidance and less tax aggressiveness, and firms with loan sales that weaken lenders' monitoring incentives to have less tax avoidance and more tax aggressiveness. We further find the lender monitoring effect on tax planning to be more pronounced for firms closer to financial distress and bankruptcy. [ABSTRACT FROM AUTHOR]