Open AccessThe Relationship between Agency Cost and Corporate Performance among Manufacturing Companies in Malaysia
Author(s) -
Ahmad Rizal Mazlan,
Afiruddin Tapa,
Nasaruddin Md Yusoff,
Ali Mokhtar
Publication year - 2019
Publication title -
indian-pacific journal of accounting and finance
Language(s) - English
Resource type - Journals
ISSN - 2590-406X
DOI - 10.52962/ipjaf.2019.3.3.81
Subject(s) - agency cost , leverage (statistics) , proxy (statistics) , return on equity , business , regression analysis , accounting , sample (material) , corporate governance , stock exchange , statistics , finance , mathematics , shareholder , chemistry , chromatography
The relationship between agency cost and corporate performance of manufacturing companies is examined in this study. The sample of this study is based on companies listed in Bursa Malaysia for the period from 2011 to 2016. A regression analysis was done and corporate performance is regressed against the predictor variables which where leverage, size, growth, expense, and efficiency. Data for both the dependent and predictor variables were obtained from Bursa Malaysia. This study found that in the model, three out of five proxy of agency costs are significantly related to corporate performance which measured by return on equity (ROE). The three variables which significantly related to corporate performance (ROE) are efficiency, leverage, and size with p-value 0.0226, 0.0002 and 0.0002 respectively. The other two variables found that not significantly related to corporate performance (ROE) which are company growth and expense with p-value 0.6915 and 0.3871 respectively. Hence the study found that agency cost to be significantly related to corporate performance.