Corporate Governance Quality, Ownership Structure, Agency Costs and Firm Performance. Evidence from an Emerging Economy

摘要

The purpose of this paper is to investigate the effect of corporate governance qualityand ownership structure on the relationship between the agency cost and firm performance.Both the fixed-effects model and a more robust dynamic panel generalized method of momentestimation are applied to Chinese A-listed firms for the years 2008 to 2016. The results show thatthe agency–performance relationship is positively moderated by (1) corporate governance quality,(2) ownership concentration, and (3) non-state ownership. State ownership has a negative effecton the agency–performance relationship. Various robust tests of an alternative measure of agencycost confirm our main conclusions. The analysis adds to the empirical literature on agency theoryby providing useful insights into how corporate governance and ownership concentration can helpmitigate agency–performance relationship. It also highlights the impact of ownership type on therelationship between agency cost and firm performance. Our study supports the literature thatagency cost and firm performance are negatively related to the Chinese listed firms. The investorsshould keep in mind the proxies of agency cost while choosing a specific stock. Secondly; the abuse ofmanagerial appropriation is higher in state-held firms as compared to non-state firms. Policymakerscan use these results to devise the investor protection rules so that managerial appropriation canbe minimized.