Title page for etd-0614105-031159


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URN etd-0614105-031159
Author Ling-Hsien Tseng
Author's Email Address No Public.
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Department Business Management
Year 2004
Semester 2
Degree Master
Type of Document
Language zh-TW.Big5 Chinese
Title The empirical study of the relation among firm value, capital structure, and agency problems
Date of Defense 2005-06-03
Page Count 75
Keyword
  • firm value
  • capital structure
  • agency costs
  • Abstract Corporations are subject to agency problems resulting from the separation of ownership and control. When the managers and shareholders’ interests are not consistent, managers will not care whether capital structure is stable, and furthermore will not mind if the project would improve firm value or not. The only thing managers concern about is to maximize their own benefit. Previous work only discusses the relation between firm value and capital structure, or the connection between agency problems and firm value. However, capital structure, agency problems and firm value are multi-connected. When managers adjust firm’s capital structure, firm value changes and agency costs decreases. This research examines the relation among firm value, capital structure, and agency problems of Taiwan listed companies from 1991 to 2003, excluding banks, securities, and insurance company. We address the potentially endogenous relation among these variables by estimating a three-stage least squares regression model.
      The empirical results show that the higher the debt ratio, the lower the firm value, and the higher the agency costs, the lower the firm value. Nevertheless, raising debt can mitigate the effect of agency problems on firm value. The higher firm value implies the better asset utilization. However, after firms’ gaining profit, managers might abuse discretionary expenses, such as luxurious office, cars, and upper salaries leading to serious agency costs. In the industry aspect, debt ratio of electronic industry hurts firm value. But in the non-electronic industry, debt can mitigate the effect of agency problems, especially for firms with low tangible asset ratio, because many companies in Taiwan are facing underinvestment. Raising debt will force firms to select the best portfolio and then increase the firm value.
    Advisory Committee
  • Ruey-Dang Chang - chair
  • Chi-Jeng Wang - co-chair
  • Anlin Chen - advisor
  • Files
  • etd-0614105-031159.pdf
  • indicate in-campus access in a year and off_campus not accessible
    Date of Submission 2005-06-14

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