Financial economics often assumes that equity agency costs increase with the separation of ownership and control. This paper tests this relationship using a survey sample of approximately 3800 Australian small and medium enterprises for 1996-1997 and 1997-1998. Following Ang et al. [J. Finance 55 (2000) 81], we estimate a zero equity agency cost benchmark (in terms of operating expenses and asset utilization ratios) for the 100% owner-manager firm. We then examine how agency costs change when ownership and control are separated. We report a positive relationship between equity agency costs and the separation of ownership and control. © 2004 Elsevier B.V. All rights reserved.
CITATION STYLE
Fleming, G., Heaney, R., & McCosker, R. (2005). Agency costs and ownership structure in Australia. Pacific Basin Finance Journal, 13(1), 29–52. https://doi.org/10.1016/j.pacfin.2004.04.001
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