Detail Cantuman

This study examines the effect of
institutional ownership, proxied by government and private
ownership, and bank monitoring on agency conflicts. Background
Problems: The previous literature focused on agency conflicts,
particularly those between managers and shareholders in developed
markets, with much less evidence being presented from emerging
ones. Novelty: We consider the role of creditors (the banks) in
mitigating agency conflicts, and the managers’ irresponsible behavior,
which in previous studies has been largely under-elaborated.
Research Methods: Using 1,525 observations of 305 non-financial
companies that were listed in the 2011-2015 period, we employ the
generalized least squares method to deal with potential econometric
concern such as autocorrelation and heteroscedasticity.
Finding/Results: We find that institutional ownership and bank
monitoring, proxied by the number of banks and the share of their
loans, are negatively related to agency conflicts. Conclusion: Banks
and institutional ownership lead to lower agency conflicts. However,
one should mitigate free-rider problems emanated from these Keywords:
agency conflict,
institutional ownership,
government ownership,
bank monitoring