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Agency issues and the effects of corporate governance mechanisms on agency costs in Chinese listed companies

Chen, Yuezhao 2010. Agency issues and the effects of corporate governance mechanisms on agency costs in Chinese listed companies. PhD Thesis, Cardiff University.

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Abstract

Two types of agency problems tend to predominate in the modern corporations, i.e., principal-agent (owner-manager) conflicts and principal-principal (large shareholder appropriation) conflicts. This PhD project aims to identify the principal-principal agency problems, to investigate contextual factors that affect the usefulness of governance mechanisms, to explore satisfying ways to measure agency costs, and to test the effectiveness of selected corporate governance mechanisms in mitigating agency costs in Chinese listed companies. The main discussions lie in the causes and formations of Type II agency issues, and how effective governance mechanisms work to mitigate these issues. Both qualitative and quantitative analyses are used. An in-depth case study is undertaken and a sample of 6344 observations of Chinese listed companies during 2000-2005 is used in econometric models to examine the role of various governance mechanisms in alleviating agency costs. There are some significant findings. State ownership does not have constant detrimental impact on firm performance or directly contribute to agency costs. Legal person ownership is found to be most effective in reducing agency costs but has similar impact as state ownership for performance. Foreign ownership has mix results and managerial ownership is negligible. Board and external auditing both have significant impact on firm performance and agency costs in different ways, as well as various control variables. In terms of direct measurement of agency costs, other receivables seem to generate most significant results, while free cash flow does not. Return on equity/asset also has significant results as predicted. This is a comprehensive study to contribute to existing literature on Type II agency problems and empirical research in China. Findings on these aspects will help the listed companies devise effective measures for improving corporate governance practice in China and other transitional economies. An improved corporate governance system will strengthen Chinese companies' competitiveness on global market.

Item Type: Thesis (PhD)
Status: Unpublished
Schools: Business (Including Economics)
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
ISBN: 9781303195648
Date of First Compliant Deposit: 30 March 2016
Last Modified: 09 Jan 2018 23:26
URI: http://orca-mwe.cf.ac.uk/id/eprint/54376

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