The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)

Malaysia is known for its highly concentrated ownership structure. The highly concentrated ownership structure brings an advantage of having less asymmetric information but at the same time is said to be prone to agencyrelated problems such as risk shifting, empire building and shirking. The...

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Main Author:	Chee , Hong Kok
Format:	Thesis
Language:	English
Published:	2010
Subjects:	HD28-70 Management Industrial Management
Online Access:	http://eprints.usm.my/42913/1/Chee_Hong_Kok24.pdf
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spelling	my-usm-ep.429132019-04-12T05:26:50Z The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems) 2010-06 Chee , Hong Kok HD28-70 Management. Industrial Management Malaysia is known for its highly concentrated ownership structure. The highly concentrated ownership structure brings an advantage of having less asymmetric information but at the same time is said to be prone to agencyrelated problems such as risk shifting, empire building and shirking. Therefore, the study is undertaken to ascertain if the level of debt (capital structure level) of Malaysian companies are heavily influenced by the agencyrelated problems or create an efficient monitoring mechanism. Through previous studies from countries with similar ownership structure such as Indonesia (Taridi, 1999) and Thailand (Wiwattanakantang, 1999) show no monitoring mechanism and having monitoring mechanism respectively, Malaysia warrants a special investigation as her investor protection law is better than those of the two mentioned countries (La Porta, Lopez-de-Silanes, Shleifer and Vishny, 1998). This study addresses the relationship between capital structure and concentrated ownership (agency-related problems). Using panel data analysis methodolgy, 179 Malaysian listed Main Board firms covering a period of 11 years from 1993 to 2003 were examined. Managerial ownership did not have a significant relationship with debt ratio implying that debt is not used as a monitoring device and at the same time debt was not used to maintain control over their firm. Evidence from this study suggests that managerial ownership resulted in higher profitability and this rejects the presence of Type II agency problems (conflicts between owner-manager and minority shareholders). High ownership concentration was found to be an effective control device. The same goes for foreign ownership. There was no evidence of moral hazard problems in the form of asset tangibility in this study. This study did not find the presence of Type II agency conflicts via measures like profitabilty. Also, there was no evidence of wealth transfer (a form of Type II agency problems) through dividends. 2010-06 Thesis http://eprints.usm.my/42913/ http://eprints.usm.my/42913/1/Chee_Hong_Kok24.pdf application/pdf en public phd doctoral Universiti Sains Malaysia Pusat Pengajian Pengurusan
institution	Universiti Sains Malaysia
collection	USM Institutional Repository
language	English
topic	HD28-70 Management Industrial Management
spellingShingle	HD28-70 Management Industrial Management Chee , Hong Kok The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)
description	Malaysia is known for its highly concentrated ownership structure. The highly concentrated ownership structure brings an advantage of having less asymmetric information but at the same time is said to be prone to agencyrelated problems such as risk shifting, empire building and shirking. Therefore, the study is undertaken to ascertain if the level of debt (capital structure level) of Malaysian companies are heavily influenced by the agencyrelated problems or create an efficient monitoring mechanism. Through previous studies from countries with similar ownership structure such as Indonesia (Taridi, 1999) and Thailand (Wiwattanakantang, 1999) show no monitoring mechanism and having monitoring mechanism respectively, Malaysia warrants a special investigation as her investor protection law is better than those of the two mentioned countries (La Porta, Lopez-de-Silanes, Shleifer and Vishny, 1998). This study addresses the relationship between capital structure and concentrated ownership (agency-related problems). Using panel data analysis methodolgy, 179 Malaysian listed Main Board firms covering a period of 11 years from 1993 to 2003 were examined. Managerial ownership did not have a significant relationship with debt ratio implying that debt is not used as a monitoring device and at the same time debt was not used to maintain control over their firm. Evidence from this study suggests that managerial ownership resulted in higher profitability and this rejects the presence of Type II agency problems (conflicts between owner-manager and minority shareholders). High ownership concentration was found to be an effective control device. The same goes for foreign ownership. There was no evidence of moral hazard problems in the form of asset tangibility in this study. This study did not find the presence of Type II agency conflicts via measures like profitabilty. Also, there was no evidence of wealth transfer (a form of Type II agency problems) through dividends.
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Chee , Hong Kok
author_facet	Chee , Hong Kok
author_sort	Chee , Hong Kok
title	The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)
title_short	The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)
title_full	The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)
title_fullStr	The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)
title_full_unstemmed	The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)
title_sort	relationship between capital structure and concentrated ownership (agency-related problems)
granting_institution	Universiti Sains Malaysia
granting_department	Pusat Pengajian Pengurusan
publishDate	2010
url	http://eprints.usm.my/42913/1/Chee_Hong_Kok24.pdf
_version_	1747821126429442048

The Relationship Between Capital Structure And Concentrated Ownership (Agency-Related Problems)

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