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Publications
  • December 2008
  • Article
  • Journal of Accounting Research

Corporate Governance and Agency Conflicts

By: Aiyesha Dey
  • Format:Print
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Abstract

I investigate whether corporate governance is associated with the level of agency conflicts in firms. I employ exploratory principal components analysis on 22 individual governance variables to obtain seven factors that represent the different dimensions of governance for a firm. I measure the level of agency conflicts in firms based on seven proxies for agency conflicts used in the literature. I find that firms with greater agency conflicts have better governance mechanisms in place, particularly those related to the board, audit committee, and auditor. I also find that the composition and functioning of the board, the independence of the auditor, and the equity‐based compensation of directors are significantly associated with firm performance, but primarily for firms with high agency conflicts. Overall, the results support the theory that the existence and role of various governance mechanisms in a firm are a function of the level of agency conflicts in the firm.

Keywords

Corporate Governance; Agency Theory

Citation

Dey, Aiyesha. "Corporate Governance and Agency Conflicts." Journal of Accounting Research 46, no. 5 (December 2008): 1143–1181.
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About The Author

Aiyesha Dey

Accounting and Management
→More Publications

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  • Bear to Bull? An Analyst’s Journey with Netflix By: Aiyesha Dey and Joseph Pacelli
  • Ginkgo Bioworks vs. Scorpion Capital: The Debate Over Related-Party Revenues By: Jonas Heese, Aiyesha Dey and Suraj Srinivasan
  • Understanding The Value of DEI Programs: Perspectives from Corporate Leadership By: Aiyesha Dey, Kristina M. Rennekamp and Joseph Pacelli
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