Controlling Shareholders,Manager's Involvement and Agency Costs

This study investigates the effects of controlling shareholders on and manager's involvement in two existing kinds of agency costs: agency costs associated with shareholders and managers conflicts,and agency costs associated with controlling shareholders and dispersed shareholders.The empirical results,based on the data of China's listed firms from 2001 to 2003,reveal that the presence of controlling shareholders contribute little to mitigate the managers and shareholders' agency costs while dramatically increase the controlling shareholders and dispersed shareholders' agency costs,thus detrimental to the corporate value.Also,managers from controlling shareholders can ease the managers and shareholders' agency costs.Evidence also shows that the more concentrated the state-controlled firms,the less agency costs associated with managers and shareholders,and the more agency costs associated with controlling shareholders and dispersed holders.Nonetheless,family-controlled firms display significantly less agency costs associated with both.