<abstract xmlns="http://www.w3.org/1999/xhtml"><p>This research attempts to analyze the relationship between agency, control and corporate governance attributes for a sample of 267 firms listed on the Pakistan Stock Exchange (PSX) from 2005 to 2008. The results show that a) Pakistani listed firms are facing high agency costs problems in contrast to established markets. b) Factors are observed important to having strong effect on mitigating agency costs levels: corporate dividend policy, degree of board independence, and institutional ownership. c) Corporate governance factors reduce discretionary expenditure ratio, increase assets utilization ratio and free cash flow ratio. d) Control variables increases the asset utilization ratio and decreases the free cash flow and increases the managers’ performance (Tobin’s Q ratio). e) Ownership attributes regulate free cash flow and decrease the discretionary expenditure ratio. The outcomes of this research lead to the proposed use of recommended governance, control and ownership attributes to overcome agency problems and a sound policy for better corporate governance (better management of agency cost issues) for listed firms.</p></abstract>

This research attempts to analyze the relationship between agency, control and corporate governance attributes for a sample of 267 firms listed on the Pakistan Stock Exchange (PSX) from 2005 to 2008. The results show that a) Pakistani listed firms are facing high agency costs problems in contrast to established markets. b) Factors are observed important to having strong effect on mitigating agency costs levels: corporate dividend policy, degree of board independence, and institutional ownership. c) Corporate governance factors reduce discretionary expenditure ratio, increase assets utilization ratio and free cash flow ratio. d) Control variables increases the asset utilization ratio and decreases the free cash flow and increases the managers’ performance (Tobin’s Q ratio). e) Ownership attributes regulate free cash flow and decrease the discretionary expenditure ratio. The outcomes of this research lead to the proposed use of recommended governance, control and ownership attributes to overcome agency problems and a sound policy for better corporate governance (better management of agency cost issues) for listed firms.

Analyzing the Link Between Agency Problems, Governance and Control Attributes for Pakistan

Financial Internet Quarterly

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

This research attempts to analyze the relationship between agency, control and corporate governance attributes for a sample of 267 firms listed on the Pakistan...

Analyzing the Link Between Agency Problems, Governance and Control Attributes for Pakistan

Published Online: Jul 25, 2018

Page range: 43 - 65

Received: Mar 26, 2016

Accepted: Sep 20, 2017

DOI: https://doi.org/10.1515/fiqf-2016-0029

Keywords
corporate governance, performance, agency cost, ownership, pakistan stock exchange

© 2017 Ahmad Ghazali et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Analyzing the Link Between Agency Problems, Governance and Control Attributes for Pakistan

Published Online: Jul 25, 2018

Page range: 43 - 65

Received: Mar 26, 2016

Accepted: Sep 20, 2017

DOI: https://doi.org/10.1515/fiqf-2016-0029

Keywordscorporate governance, performance, agency cost, ownership, pakistan stock exchange

© 2017 Ahmad Ghazali et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
corporate governance, performance, agency cost, ownership, pakistan stock exchange