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Corporate Capital Structure, Agency Costs, and Ownership Control: The Case of All-Equity Firms

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  • Agrawal, Anup
  • Nagarajan, Nandu J

Abstract

This paper provides evidence that all-equity firms exhibit greater levels of managerial stockholdings, more extensive family relationships among top management, and higher liquidity positions than a matched sample of levered firms. Further, top managers of all-equity firms with family involvement in corporate operations have greater control of corporate voting rights than managers of all-equity firms without family involvement. These findings are consistent with the interpretation that managerial control of voting rights and family relationships among senior managers are important factors in the decision to eliminate leverage. Copyright 1990 by American Finance Association.

Suggested Citation

  • Agrawal, Anup & Nagarajan, Nandu J, 1990. " Corporate Capital Structure, Agency Costs, and Ownership Control: The Case of All-Equity Firms," Journal of Finance, American Finance Association, vol. 45(4), pages 1325-1331, September.
  • Handle: RePEc:bla:jfinan:v:45:y:1990:i:4:p:1325-31
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    4. Connelly, J. Thomas & Limpaphayom, Piman & Nagarajan, Nandu J., 2012. "Form versus substance: The effect of ownership structure and corporate governance on firm value in Thailand," Journal of Banking & Finance, Elsevier, vol. 36(6), pages 1722-1743.
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    6. Shumi Akhtar & Barry Oliver, 2009. "Determinants of Capital Structure for Japanese Multinational and Domestic Corporations-super-," International Review of Finance, International Review of Finance Ltd., vol. 9(1-2), pages 1-26.
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    8. Mulyani, Evy & Singh, Harminder & Mishra, Sagarika, 2016. "Dividends, leverage, and family ownership in the emerging Indonesian market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 43(C), pages 16-29.
    9. Shumi Akhtar, 2005. "The Determinants of Capital Structure for Australian Multinational and Domestic Corporations," Australian Journal of Management, Australian School of Business, vol. 30(2), pages 321-341, December.
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    15. Khan Shoaib & Suzuki Yasushi, 2016. "Ownership And Capital Structure Of Pakistani Non-Financial Firms," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 12(1), pages 57-67, June.
    16. Adam, Y.O. & Eltayeb, A.M., 2016. "Forestry decentralization and poverty alleviation: A review," Forest Policy and Economics, Elsevier, vol. 73(C), pages 300-307.
    17. Devos, Erik & Dhillon, Upinder & Jagannathan, Murali & Krishnamurthy, Srinivasan, 2012. "Why are firms unlevered?," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 664-682.
    18. D'Mello, Ranjan & Gruskin, Mark, 2014. "Are the benefits of debt declining? The decreasing propensity of firms to be adequately levered," Journal of Corporate Finance, Elsevier, vol. 29(C), pages 327-350.
    19. Anderson, Ronald C & Reeb, David M, 2003. "Founding-Family Ownership, Corporate Diversification, and Firm Leverage," Journal of Law and Economics, University of Chicago Press, vol. 46(2), pages 653-684, October.
    20. Céspedes, Jacelly & González, Maximiliano & Molina, Carlos, 2008. "Ownership Concentration and the Determinants of Capital Structure in Latin America," Galeras. Working Papers Series 020, Universidad de Los Andes. Facultad de Administración. School of Management.
    21. Francesco Barbera & Ken Moores, 2013. "Firm ownership and productivity: a study of family and non-family SMEs," Small Business Economics, Springer, vol. 40(4), pages 953-976, May.

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