The Relationship between Agency Cost and Corporate Performance among Manufacturing Companies in Malaysia

  • Ahmad Rizal Mazlan Universiti Utara Malaysia Kuala Lumpur
  • Afiruddin Tapa School of Economics, Finance and Banking, Universiti Utara Malaysia
  • Nasaruddin Md Yusoff Universiti Utara Malaysia Kuala Lumpur
  • Ali Badron Mokhtar Islamic Business School, Universiti Utara Malaysia
Keywords: Agency Cost, Corporate Performance, Return on Equity

Abstract

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.

Published
2019-07-01
How to Cite
Mazlan, A. R., Tapa, A., Md Yusoff, N., & Mokhtar, A. B. (2019). The Relationship between Agency Cost and Corporate Performance among Manufacturing Companies in Malaysia. Indian-Pacific Journal of Accounting and Finance, 3(3), 38-50. https://doi.org/10.32890/ipjaf.2019.3.3.81
Section
Main Section