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The effect of three types of agency problems on the firm performance: evidence from Indonesia

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  • Ni Luh Gde Lydia Kusumadewi
  • Ratna Wardhani

Abstract

This research examines the impact of three types of agency problems (agency problem Type I, II and III) on corporate performance. This study uses 1.760 observations of nonfinancial companies from Indonesia during 2013-2017. The results show that agency problems Type I (manager vs. shareholder) and Type II (majority vs. minority shareholder) in general positively affect performance, whereas agency problems Type III (shareholder vs. creditor) negatively affect performance. This study contributes to agency theory literature and to local and international investors that invest in the Indonesian capital market by showing that not all types of agency problems negatively affect performance.

Suggested Citation

  • Ni Luh Gde Lydia Kusumadewi & Ratna Wardhani, 2020. "The effect of three types of agency problems on the firm performance: evidence from Indonesia," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 13(3), pages 279-286.
    • Handle: RePEc:ids:ijmefi:v:13:y:2020:i:3:p:279-286
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    Cited by:

    1. Anisa Safiah Maznorbalia & Muhammad Aiman Awalluddin & Ardzlyn Hawatul Yuhanis Ayob, 2023. "Exploring the role of institutional investors in voting, monitoring and dialogue engagement in mitigating agency conflict in Malaysia’s public listed companies," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-9, December.

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