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

Authors: Ni Luh Gde Lydia Kusumadewi; Ratna Wardhani

Addresses: Faculty of Economics and Business, Department of Accounting, Universitas Katolik Indonesia Atma Jaya, DKI Jakarta, 12930, Indonesia ' Faculty of Economics and Business, Department of Accounting, Universitas Indonesia, Kampus UI Depok, 16424, Indonesia

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.

Keywords: agency problem; firm performance; market-based performance; accounting-based performance; ROA; return on assets; Tobin's Q; Indonesia.

DOI: 10.1504/IJMEF.2020.108824

International Journal of Monetary Economics and Finance, 2020 Vol.13 No.3, pp.279 - 286

Received: 25 Jul 2019
Accepted: 29 Feb 2020

Published online: 28 Jul 2020 *

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