Agency cost and long run performance of debt issuers

This study focuses on the agency costsexplanation of long run performance of debt issuers based on debt issuance data in Malaysia during January 2001 to October 2009.Long run performance is measured (BHAR) while growth opportunity (GO), ownership concentration (OC) and free cash flow (FCF) are adopt...

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Bibliographic Details
Main Authors: Ibrahim, Yusnidah, Uddin, Md Mohan, Taufil Mohd, Kamarun Nisham, Minai, Mohd Sobri
Format: Conference or Workshop Item
Language:English
Published: 2011
Subjects:
Online Access:http://repo.uum.edu.my/9095/1/25-IC.pdf
http://repo.uum.edu.my/9095/
http://ipedr.com/list-41-1.html
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Summary:This study focuses on the agency costsexplanation of long run performance of debt issuers based on debt issuance data in Malaysia during January 2001 to October 2009.Long run performance is measured (BHAR) while growth opportunity (GO), ownership concentration (OC) and free cash flow (FCF) are adopted as the proxy for agency costs.Using linear regression method, the study finds that BHAR is positively influenced by GO and OC and negatively influenced by FCF which support the agency cost explanation of capital structure. Increase inthe performance of debt issuersis found to be associated with the monitoring role of debt. Debt issuers with more concentrated ownership are found to be benefitted from the issuancethrough the reduction of agency costs.