The Relationship of Corporate Governance Mechanisms with Costs of the Agencies of Iranian Companies

Document Type : Research Paper

Authors

1 Associate Prof., Dep. of Management & Planning, Imam Hossien University, Tehran, Iran

2 Instructor, Faculty of Accounting, Payam-e-noor University, Ghaemshahr, Iran

3 Ph.D. Candidate in Human Resource Management, Islamic Azad University, Qazvin, Iran

Abstract

This study attempts to investigate the impacts of several
corporate governance mechanisms on two alternative proxies for agency
costs, namely the ratio of total sales to total assets (asset turnover) and the
ratio of selling, general and administrative expenses to total sales
(SG&A). Agency costs, non-executive directors on the board, and
institutional investors are dependent variables. The analysis is conducted
by a cross-sectional regression approach. Findings of the research are
different in regard to measuring scales of agency costs. There is
significant relationship between non-executive directors and agency
costs, in regard to asset turnover as a measuring scale, but this is not a
significant relationship for institutional investors. By using the ratio of
operational expenses to sales as measuring scale of agency costs, there is
not also significant relationship between non-executive directors and
agency costs, but this is significant relationship for institutional investors.
In regard to combination of reverse ratio of asset turnover and ratio of
operational expenses to sales as measuring scales of agency costs, there is
significant relationship between non-executive directors and institutional
investors with agency costs.

Keywords

Main Subjects

References

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