J. A. Muñoz Mendoza, S. M. S. Yelpo, Carmen Lissette Veloso Ramos, C. Fuentealba
{"title":"Monitoring and Managerial Discretion Effects on Agency Costs: Evidence from an Emerging Economy","authors":"J. A. Muñoz Mendoza, S. M. S. Yelpo, Carmen Lissette Veloso Ramos, C. Fuentealba","doi":"10.1590/1807-7692bar2021190112","DOIUrl":null,"url":null,"abstract":"ABSTRACT We analyzed the effect of managerial ownership, leverage, and managerial discretion on the agency costs of 14,719 Chilean companies. The results of the instrumental variables (IV) regressions indicate that managerial ownership and capital structure have a negative and non-linear effect on agency costs. Managerial ownership concentration is an effective means of internal control over agency costs, discarding the managerial entrenchment effect. The non-linear impact of debt suggests that for high leverage levels, agency costs would increase due to higher bankruptcy costs. Managerial discretion reduces agency costs; however, in firms with low growth opportunities, it increases them. These results have relevant implications for firms’ corporate policy and investors.","PeriodicalId":53636,"journal":{"name":"BAR - Brazilian Administration Review","volume":"1946 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2021-07-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"BAR - Brazilian Administration Review","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1590/1807-7692bar2021190112","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"Business, Management and Accounting","Score":null,"Total":0}
引用次数: 1
Abstract
ABSTRACT We analyzed the effect of managerial ownership, leverage, and managerial discretion on the agency costs of 14,719 Chilean companies. The results of the instrumental variables (IV) regressions indicate that managerial ownership and capital structure have a negative and non-linear effect on agency costs. Managerial ownership concentration is an effective means of internal control over agency costs, discarding the managerial entrenchment effect. The non-linear impact of debt suggests that for high leverage levels, agency costs would increase due to higher bankruptcy costs. Managerial discretion reduces agency costs; however, in firms with low growth opportunities, it increases them. These results have relevant implications for firms’ corporate policy and investors.
期刊介绍：
Launched in 2004, BAR has an international scope in terms of topics of interest, target audience, and editorial boards. It is an A2-journal according to the Brazilian classification Qualis/Capes, which is thus a strong signal about the quality of published works and about the transparency of the editorial process. BAR follows the editorial principles available in document Best Practices of Scientific Publication, an initiative championed by the Brazilian Academy of Management (ANPAD) that seeks to assist journals to achieve high scholarly standards and enhance their impact as sources for theoretical and applied research. Furthermore, since 2013, BAR is a member of COPE (Committee on Publication Ethics), what is another signal of efforts made towards adhering to the most rigorous ethical principles in academic publication.
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