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Shareholder valuations are economically significantly and statistically negatively correlated with the length of 10 K filings or their digital file sizes, whereas annual reports posted on corporate websites are uninformative. Firms with longer 10 K filings are likely to experience slower growth, lower profitability, experience free cash flow problems, and write off goodwill and intangible assets from past acquisitions. Lengthy filings are more damaging than suggested by three‐year performance following report filing dates, suggesting that outside investors penalize firms for information asymmetries and associated agency costs. Full disclosure is best from the standpoint of long‐term shareholder wealth, but managers could be maximizing short‐term term returns that better match their investment horizons. [ABSTRACT FROM AUTHOR]

The purpose of this article is to determine what causes the phenomenon of disappearing dividends, which mostly occurs in stock exchanges in developed and emerging countries. This is the phenomenon of the decreasing probability of issuers to choose to pay dividends (cash, stock, and mixed) rather than not to pay. The results of multinomial logit model show, that size and profitability have a significant positive effect on cash, stock, and mixed dividend decisions. The decision not to pay dividends is influenced by low agency costs, high debt, over-liquidity, and excessive investment opportunities. To overcome this phenomenon, all stakeholders must be able to manage the above cause variables in an integrated manner. [ABSTRACT FROM AUTHOR]

This paper analyzes the effect of CEO succession via overall hierarchical jumps on Chinese firm performance and agency cost. It categorizes hierarchical jumps into low, medium and high level. The study reveals through panel regression analysis that the CEOs appointed via medium hierarchical jumps substantially enhance firm performance. Conversely, the successors appointed through low and high hierarchical jumps have relatively no effect on firm profitability. Conclusively, this research evaluates that the aged CEOs should be preferred among the CEOs successors via high hierarchical jumps, which have mitigated the agency problem decisively. [ABSTRACT FROM AUTHOR]

This article addresses one aspect of patent pools that has not received much attention—a patent pool's role in stabilizing a cartel of downstream producers. This article first reviews the problem of cartel cheating. Any potential mechanisms that a cartel can use to increase its stability face three main challenges: (1) the cost of management, (2) agency costs, and (3) the requirement of secrecy. This article argues that the vertical licensor–licensee relationship inherent to a patent pool would contribute to more effective monitoring of compliance with cartel agreements by licensees. It also argues that the aggregation of patents in a patent pool would better effectuate the punishment of cartel cheating. The article's main finding that a patent pool is uniquely suited to manage a cartel is a reminder that an overly permissive view of patent pools can invite anticompetitive hazards. [ABSTRACT FROM AUTHOR]

Using the data of A-share listed companies from 2011 to 2016 in Shanghai and Shenzhen, we establish a panel threshold model which the threshold variable is internal control, and analyse the nonlinearity relationship between dividend and agency cost. The result shows:There exist threshold effects between dividend and agency cost based on internal control. Cash dividend can reduce agency cost when internal control quality is higher than the threshold, otherwise, cash dividend will no longer have any effect. That means, a valid internal control is the foundation of dividend governance function. Furthermore, the descriptive statistics result implies that, companies with higher internal control quality than threshold are popular. This paper proofs that agency theory is effective in Chinese market, and higher internal control quality higher propensity to pay. So we disagree with the previous hypothesis of "result" and "substitution" between internal control and dividend. [ABSTRACT FROM AUTHOR]

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]

This paper endogenizes the debt‐equity ratio and embodies financial leverage in a cash‐in‐advance model of endogenous growth. Our analysis finds that the debt‐equity ratio is positively related to the balanced‐growth rate, since it serves as a 'financial accelerator' to stimulate investment projects. Compared to previous studies, this positive relationship gives rise to an additional balance‐sheet effect, which substantially affects the macroeconomic consequences of monetary and taxation policies. Due to the existence of the balance‐sheet effect, we also find that the Friedman rule is not necessarily optimal. [ABSTRACT FROM AUTHOR]

This study focuses on structuring tangible asset backed loans to inhibit their endemic option to default. We adapt the pragmatic approach of a margin loan in the configuring of collateralized debt to yield a quasi‐default‐free facility. We link our practical method to the current Basel III (2017) regulatory framework. Our new concept of the Loan Valuation Adjustment (LVA) and novel method to minimize the LVA converts the risky loan into a quasi risk‐free loan and achieves value maximization for the lending financial institution. As a result, entrepreneurial activities are promoted and economic growth invigorated. Information asymmetry, costly bailouts and resulting financial fragility are reduced while depositors are endowed with a safety net equivalent to deposit insurance but without the associated moral hazard between risk‐averse lenders and borrowers. [ABSTRACT FROM AUTHOR]

The concept of debt overhang (that is, an equity‐maximizing levered firm will under‐invest relative to a firm‐value‐maximizing firm) is well established in the literature. A number of papers have demonstrated it as delayed investment (when investment size is specified) or smaller investment (when investment time is specified). However, there is no work on the underinvestment effect when the firm chooses both size and timing of investment, as it usually does in real life. This is what our paper focuses on. When the firm has the flexibility to choose both size and time, the effect is complicated by the fact that delayed investment results in larger investment, which suggests that the underinvestment problem might be mitigated. We find, however, that the effect depends on how underinvestment is measured. When measured by the expected present value of investment, flexibility can mitigate or exacerbate the underinvestment problem, depending on the cost of installing capacity. But when measured by the agency cost, flexibility always exacerbates the underinvestment problem. It is shown numerically that, at the optimal leverage ratio, the agency cost with plausible parameter values can be economically significant. Thus, with the flexibility of choosing both time and size of investment, the debt overhang problem can be of significant practical relevance in corporate investment decisions. [ABSTRACT FROM AUTHOR]

Abstract Drawing on an agency theory approach, this paper examines conflict of interests and the resulting agency costs in the provision of urban public transport services in Istanbul's public transport system, particularly the private bus and minibus operators' relationship with local government. The agency problem in Istanbul's urban mobility system shows itself most explicitly in private bus and minibus operators because of the net-cost (NC) contract model in place. The private bus and minibus operators' relationship with local government is examined as a case study of agency relationships. Conceptually, government transport authorities and transport operators, together with the passengers, are the main actors of this urban public transport system. They all have distinct needs, interests and requirements and interact with each other, all embedded in a specific institutional environment. Service quality provided by public transport operators depends on the positive interactions between these actors. Whereas passengers demand reliable, affordable, safe and comfortable mobility services, private bus and minibus operators aim to increase their revenue and maximise their profits. In contrast to this, government bus operators provide in-house bus services without much concern for profitability. Regulators or local authorities, on the other hand, are expected to set up an institutional environment where passengers' and operators' expectations are met in a satisfactory manner. Empirical analyses and interviews with key agents demonstrate that agency costs are shown to be the result of misaligned interests between the government transport authority and private operators that lead to reduced service quality in terms of safety, comfort, reliability and affordability. We conclude that the agency costs of current NC contracting on passengers in Istanbul has deficiencies and propose instead a performance-based gross-cost (PrGC) contracting model. PrGC contracting can alleviate agency costs by changing the incentives of operators where regulatory and financing mechanisms are not enough to handle NC contracting. Istanbul represents some transferable lessons and implications, especially for developing cities around the world. Highlights • Explores the conflicts of interests between urban transport operators and authorities through agency theory approach. • Gives an empirical application of agency analysis for Istanbul's private operators. • Reveals the agency costs of current net-cost contracting on service quality in Istanbul. • Proposes a performance-based gross-cost contracting to mitigate agency costs. • Provides policy recommendations to reduce the undesirable impacts of agency costs on urban mobility policies. [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]

This research aims to test the effect of agency cost toward financial performance in family business measured by Tobin’s Q and Altman Z-Score with proxied by insider ownership, dispersion ownership, institutional ownership. This research was conducted at family business firms listed in Indonesian Stock Exchange from 2011-2015. In this research, multiple linear regression analysis were used. The result show the agency cost (insider ownership, dispersion ownership, institutional ownership) simultaneously have a significant effect toward Tobin’s Q, insider ownership and institutional ownership are not significant toward Tobin’s Q, dispersion ownership has a significant effect toward Tobin’s Q, agency cost (insider ownership, dispersion ownership, institutional ownership) simultaneously and partial are not significant toward Altman Z-Score.

In this study, we investigated the relationship between industrial diversification and firm performance using a market-based performance measure and an accounting measure. We used the data of the firms listed on Borsa Istanbul during the period between 2006 and 2012. The results of the panel data indicate that there is a significant positive relationship between diversification and performance. We found that diversified firms outperformed the single firms. As is compatible with a resource-based approach, it was found that diversified firms tended to use their resources more efficiently compared to single firms.