Agency problems and the simultaneity of financial decision making

Crutchley, Claire E.; Jensen, Marlin R. H.; Jahera, John S.; Raymond, Jennie E.

doi:10.1016/s1057-5219(99)00011-3

Cited by 142 publications

(121 citation statements)

References 28 publications

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“…To sum up, institutional ownership ratio has a significantly negative relation with leverage which is in line with studies of Michaely and Vincent (2012), Tong and Ning (2004) and partial data of Crutchley et al (1999). Tangibility has a significantly negative relation in the sample which is not in line with trade-off theory since increase in tangibility is expected to ease increase in level of debt.…”

Section: Resultssupporting

confidence: 70%

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A Study of the Relationship Between Institutional Ownership and Capital Structure: Evidence From Turkey

Kasaboğlu¹,

Çinko²

2017

mjecon

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This paper investigates how institutional investors affect capital structures of Borsa Istanbul (BIST) firms. Data is gathered for the period between 2005 and 2013 for 150 firms. Prior years are not taken into consideration in order not to distort the data since inflationary accounting practices were applied in the market before 2005. Data is obtained from Bloomberg database and Central Registry Agency. Sample consists of 150 non-financial firms which have full data set for the research period. Panel data analysis is used to analyze 1,350 firm-year observations. Data is investigated for the relation between institutional ownership and financial leverage. The model has been designed such that financial leverage is dependent variable, and institutional ownership is explanatory variable. Control variables such as tangibility, size, tax, profit, liquidity and market value / book value have also been employed in the model. The result of the model shows that there is a significantly negative relationship between institutional ownership and financial leverage. Keywords

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Section: Resultssupporting

confidence: 70%

“…Based on the other proxies they conclude that firms with a low debt ratio tend to attract more institutional investors. Crutchley et al (1999) conduct their analysis only for two years. In 1987, they find significantly positive relation between debt as a dependent variable and institutional ownership as an independent variable.…”

Section: Empirical Findingsmentioning

confidence: 99%

A Study of the Relationship Between Institutional Ownership and Capital Structure: Evidence From Turkey

Kasaboğlu¹,

Çinko²

2017

mjecon

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“…Given the array of internal monitoring tools that can be used to resolve agency problems, owners of the firms can adopt a combination of these policies. This also implies that a firm's managerial ownership, leverage and dividends might be simultaneous and there is substitution effects between the three financial variables directly related to each other (Jensen, Solberg, & Zorn, 1992;Chen & Steiner, 1999;Crutchley, Jensen, Jahera, & Raymond, 1999).…”

Section: Introductionmentioning

confidence: 99%

Managerial Ownership, Leverage and Dividend Policies: Empirical Evidence from Vietnam’s Listed Firms

Vo¹,

Nguyen²

2014

IJEF

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The purpose of this paper is to examine the interrelationship among managerial ownership, leverage and dividend policies. The analysis is performed using three-stage least squares (3SLS) estimation on a sample of 81 listed firms on HCM City Stock Exchange (HOSE) during the period 2007-2012. The empirical results indicate that managerial ownership has a negative relationship with leverage. This finfing is supported by Agency Theory. Also, the results provide strong support for Pecking Order Theory, which suggests that there is a negative relationship between leverage and dividend. However, contrary to expectations, managerial ownership is found to have positive impact on dividend. It means that companies with higher levels of managerial holdings are consciously choosing higher level of dividends.

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“…This monitoring activity will reduce agency costs because it allows the company to use lower levels of debt (Isrina, 2006). According to Crutchley et al (1999), the effect of leverage on institutional ownership is positive. High leverage caused the company monitored by the debtholder lead managers to act in accordance with the debtholders and shareholders interest, so that this condition w attract the entry of institutional ownership.…”

Section: Interdependence Relationship Of Leverage and Institutional Omentioning

confidence: 99%

Interdependence between Institutional Ownership and Leverage of Free Cash Flow: The Development of Agency Theory Model in Balancing Conflict of Interest in Indonesian Company

Herdinata¹

2015

MJSS

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Agency problems and the simultaneity of financial decision making

Cited by 142 publications

References 28 publications

A Study of the Relationship Between Institutional Ownership and Capital Structure: Evidence From Turkey

A Study of the Relationship Between Institutional Ownership and Capital Structure: Evidence From Turkey

Managerial Ownership, Leverage and Dividend Policies: Empirical Evidence from Vietnam’s Listed Firms

Interdependence between Institutional Ownership and Leverage of Free Cash Flow: The Development of Agency Theory Model in Balancing Conflict of Interest in Indonesian Company

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