Agency theory and corporate monitoring : evidence from developing country.
Monitoring mechanisms that are mandatory for Malaysian public listed companies are internal auditing, external auditing and directorship. There is a comparative advantage of each type of these mechanisms and they complement each other. It is claimed that the attributes of an organisation can infl...
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Format: | Conference or Workshop Item |
Language: | English English |
Online Access: | http://psasir.upm.edu.my/id/eprint/27792/1/ID%2027792.pdf http://psasir.upm.edu.my/id/eprint/27792/ |
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Summary: | Monitoring mechanisms that are mandatory for Malaysian public listed companies are internal
auditing, external auditing and directorship. There is a comparative advantage of each type of
these mechanisms and they complement each other. It is claimed that the attributes of an
organisation can influence its monitoring costs, as the costs are the function of the systems
adopted by the organisation. This is important as the costs involve may jeopardise the
shareholders wealth and future survival of the organisation. Thus, this research investigates the
impacts of these organisational attributes on the demands of these three monitoring mechanisms
among Malaysian public listed companies. The organisational attributes that are examined are
ownership structure, debt structure, information system structure, compensation structure,
multinational status and ethnicity. The results of this study provide evidence that are consistent
to agency theory; managerial shareholdings and debt structure appear to have negative
significant relationships with monitoring costs. However, another ownership variable seems to
give different finding compared to those studies in western countries. Block-holders appear to
demand more monitoring costs, which may be due to the concentrated business environment in
Malaysia. Other organisational attributes which are significant in its association with monitoring
costs are multinational status and ethnicity. |
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