Asia-Pacific Journal of Business (아태비즈니스연구)

KNU The Institute of Management & Economy Research (강원대학교 경영경제연구소)
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The Effects of Ownership Structures on Agency Costs in Internationally Diversified Firms: A Data Analysis of the KOSDAQ Market

코스닥시장에서 국제다각화 기업의 소유구조가 대리인 비용에 미치는 영향

  • Oh, Hee-Hwa (Department of Accounting & Taxation, Jeonju University)
  • 오희화 (전주대학교 회계세무학과)
  • Received : 2020.11.30
  • Accepted : 2020.12.21
  • Published : 2020.12.30
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Abstract

Purpose - This study aimed to identify the effects of ownership structures on agency costs in internationally diversified firms listed on the KOSDAQ market. Design/methodology/approach - A total of 5,824 samples were finally selected and empirically analyzed for a total of nine years from 2011 to 2019, during which the International Accounting Standards had been mandatory for firms listed on the KOSDAQ market. Findings - The results of this study showed that the effects of ownership structures on the ratio of asset turnover are positive for the major share and foreign equity ratios of international diversified firms. Moreover, by selecting the ratio of entertainment expenses as a proxy for agency expenses, this study confirmed that the effects of the ownership structure of an international diversified entity on entertainment expenditure were determined to show a significantly negative relation to entertainment expenditure, thus indicating that the higher the ratio of major shareholders, the more appropriately control the expenditure of entertainment expenses through arbitrary private deviations of the management.Furthermore, considering the effect of the ownership structure on the expenditure of sales and administrative expenses as a proxy variable for agency costs, this study verified that the majority share ratio of international diversified firms was negative to the expenditure of sales and administrative expenses, confirming that the higher the share of major shareholders, the lower the selling and administrative costs, but insignificant.Finally, as a result of determining whether the ownership structure of an international diversified firm affects the holding of free cash, the majority share of this firm shows a significantly negative relation to the ratio of the holding of surplus cash, indicating that the higher the proportion of major shareholders, the more appropriately control the holding of the entity's free cash through arbitrary private deviance by the manager. Research implications or Originality - Major shareholders of an internationally diversified firm listed on the KOSDAQ market play a positive role in the firm's performance by properly controlling agency costs that may be incurred by the management.

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