Agency Costs and Ownership Structure in Australia

Grant Fleming

Continuity Capital Partners

Richard A. Heaney

University of Western Australia; Financial Research Network (FIRN)

Rochelle McCosker

Independent Author

Pacific-Basin Finance Journal, Vol. 13, No. 1, pp. 29-52, January 2005

Financial economics often assumes that equity agency costs increase with the separation of ownership and control. This paper tests this relationship using a survey sample of approximately 3800 Australian small and medium enterprises for 1996-7 and 1997-8. Following Ang, Cole and Lin (2000) we estimate a zero equity agency cost benchmark (in terms of operating expenses and asset utilization ratios) for the 100% owner-manager firm. We then examine how agency costs change when ownership and control are separated. We report a positive relationship between equity agency costs and the separation of ownership and control.

Keywords: Equity agency costs, small to medium enterprises (SMEs), owner-managers, separation of control and ownership

JEL Classification: G32

Not Available For Download

Date posted: October 26, 2005  

Suggested Citation

Fleming, Grant and Heaney, Richard A. and McCosker, Rochelle, Agency Costs and Ownership Structure in Australia. Pacific-Basin Finance Journal, Vol. 13, No. 1, pp. 29-52, January 2005. Available at SSRN: http://ssrn.com/abstract=825224

Contact Information

Grant Alan Fleming
Continuity Capital Partners ( email )
GPO Box 314
Canberra, Australian Capital Territory 2601
Richard A. Heaney (Contact Author)
University of Western Australia ( email )
School of Business
35 Stirling Highway
Crawley, Western Australia 6009
08 6488 2902 (Phone)
08 6488 1047 (Fax)
Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
HOME PAGE: http://www.firn.org.au

Rochelle McCosker
Independent Author ( email )
No Address Available
Feedback to SSRN

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