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The IUP Journal of Corporate Governance

Corporate Governance: Literature Review on Agency Costs and Pieces of Evidence on Different Perspectives

Article Details

Pub. Date	: April, 2021
Product Name	: The IUP Journal of Corporate Governance
Product Type	: Article
Product Code	: IJCG30421
Author Name	Shubhi Agarwal and Archna Singh
Availability	: YES
Subject/Domain	: Management
Download Format	: PDF Format
No. of Pages	: 25

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Abstract

This paper intends to review different pieces of literature that try to establish a link between the tools of corporate governance and agency costs. Tools of corporate governance play a key role in reducing agency costs. The paper focuses on reviewing the literature on ownership structure, firm structure, board structure, and remuneration structure extensively. The paper reviews many aspects of ownership structure as well as firm structure, i.e., institutional ownership, non-institutional ownership, managerial ownership, firm age, and firm size. The works of literature have cited many way outs as strong institutional ownership, managerial ownership, board size, frequency of board meetings, board independence, board composition, board ownership, remuneration structure, and firm age as well as size can be beneficial in eliminating agency costs. The paper uses a descriptive research design. A lottery system of random sampling is used while selecting different kinds of literature reviews of ownership as well as remuneration structure. The paper takes the 2004-2019 time period for reviewing literature. The period is selected based on convenience sampling. The extensive review of literature will enlighten the research scholars as well as academicians in understanding the problem of agency and how tools of corporate governance will help in reducing agency costs.

Description

Agency model starts from the conflicts which arise between principal and agents who are functioning in corporate firms. The agency problem was an ancient phenomenon when human civilization did businesses and wanted to maximize their profits. Agency issue is one of the ageold issues that have persisted since the development of the joint-stock companies. Every corporate firm suffered from the agency problem, so it is essential to provide light on this concept at the present juncture. Over time, the agency problem has been seen in various ways and the many pieces of literature have provided valid evidence for it. The discussion on the literature of agency costs and many tools of corporate governance is essential to understand and explore agency problems. It is essential to focus on specific tools of corporate governance that helps in mitigating agency costs. The relevance of the agency problem has been vastly

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