School of Economics and Finance (ETDs)

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Browsing School of Economics and Finance (ETDs) by Keyword "Agency Theory"

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    Anxious Vigilance – An investigation of the relationship between Optimal Managerial Ownership and Firm Value on the JSE
    (University of the Witwatersrand, Johannesburg, 2022) Muhlarhi , Tiniso Willie; Seetharam, Yudhvir
    Managerial ownership has been advanced as a more effective corporate governance mechanism in minimising agency related costs by aligning the interests of managers with those of shareholders. This study examines the effects of equity ownership, using different ownership groups, on firm value of firms listed in the South African stock exchange to ascertain whether equity ownership results in well governed firms with higher firm value over the period of 2010 to 2020. The results are largely consistent with those in emerging markets, the results document that there is no statistically significant direct relationship between equity ownership and firm value. M ore so deviations from optimal equity ownership, both below and above optimal equity ownership, does not reduce firm value. The results also show that a portfolio of ownership firms (which refers to firms in which CEOs, the Executive Team, and Insiders (general employees) have equity ownership in the firm) outperforms a portfolio of non-ownership firms over the period 2015-2020, this aspect is more consistent to results reported in developed markets. Overall, managerial ownership does not appear to be an effective mechanism to aligning interest of shareholders and their managers in the South African landscape, other alternatives such as debt are proposed
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    The relationship between dividend policy and agency costs of non- financial listed firms on the johannesburg stock exchange (JSE)
    (University of the Witswatersrand, Johannesburg, 2023) Simane, Madou Evah; Mbululu, D.
    This study aimed to investigate the relationship between dividend policy and agency costs of non- financial firms listed on the Johannesburg Stock Exchange (JSE). The study was conducted using the dividend policy and agency theory framework. Data for the study was collected from Bloomberg and IRESS databases. The statistical software E-views was used for detailed analysis. The study used panel data for 67 JSE-listed companies for the period 2011 to 2022. The results showed that dividend payment has a negative relationship with asset turnover ratio, implying a positive relationship with agency costs. On the other hand, the management expense ratio as a proxy for agency costs showed that dividend payment can help reduce agency costs, consistent with the agency theory. The results further revealed that financial leverage can reduce agency costs. However, it could not be considered a significant factor in the reduction of agency costs because it is not statistically significant. Nonetheless, it can still play a role in helping resolve agency disputes among managers and shareholders. The results confirmed that there are agency problems among JSE-listed firms even though they are paying dividends.