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This study is related to the concept of public institution on principal agent relationship, namely the relationship between the Village Head and the Village Secretary in local government named Dolok Masihul. The number of villages studied were 44 respondents. Analysis statistical investigates relationship of research variable and using multiple regressions model. After analysing was known that formal contract had a significant positive effect on village funds allocation with value of 0.355. it means both head villager and secretaries had the competence and authority to carry it out, as Pascal (1997), Meinard (1997), Sarwoko (2010: 28) and Syofyan (2019). Hypothesis is accepted. Transaction costs have a negative effect and the hypothesis is rejected. Transaction costs refer to the governance structure as (Klein, 1999: 464-466), (Williamson, 1985). This result is different from the research by Syofyan (2019). Agency costs have coefficient value 0.072. It means agency cost significant to village funds. The hypothesis is accepted. Agency costs in this study are coaching and supervision that are positively related to the total allocation of village funds. This result is in line with Syofyan (2019).

international journal of multidisciplinary research and analysis

The Effect of Formal Contracts, Transaction Cost, Agency Cost, Principal Agent Conflicts and Principal Agent Relationships on Village Funds Allocation in Facing the Covid 19 Crisis in Dolok Masihul District, Serdang Bedagai Regency