Journal
MANAGEMENT AND ORGANIZATION REVIEW
Volume 4, Issue 1, Pages 17-38Publisher
CAMBRIDGE UNIV PRESS
DOI: 10.1111/j.1740-8784.2007.00090.x
Keywords
agency costs; board of directors; China; ownership concentration; principal-principal conflict
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By examining the level of ownership concentration across firms, we determine how principal-principal conflict, defined as the incongruence of ownership goals among shareholder groups in a corporation, impacts agency costs of Chinese boards of directors. Based on data from Chinese companies listed on the Shanghai and Shenzhen stock exchanges during 1999-2003, we found that ownership concentration had a U-shaped relationship with board compensation, board size and the presence of independent directors. These results provide corroborating evidence that principal-principal conflict can lead to high agency costs.
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