The Fundamental Agency Problem: Ownership, Monitoring, and Voluntary Disclosure

37 Pages Posted: 27 Sep 2015

See all articles by Håkan Jankensgård

Håkan Jankensgård

Lund University - Department of Business Administration; Knut Wicksell Centre for Financial Studies

Date Written: September 22, 2015

Abstract

Combining databases with unique strengths I show that stray firms, i.e. those lacking a controlling owner, have lower disclosure in financial reports. This finding illustrates managers’ preference to withhold information (“the fundamental agency problem”). I contribute to the literature by showing that, while monitoring by blockholders initially increases disclosure, disclosure decreases at high levels of block ownership. At high levels blockholders appear to lose interest in public disclosure as their access to information is virtually guaranteed. Moreover, I report findings on the impact of institutional, foreign, under-diversified, and controlling minority-owners, concluding that ownership structure has major implications for voluntary disclosure.

Keywords: Voluntary disclosure, ownership, monitoring, agency costs, block holder

JEL Classification: G30, G32

Suggested Citation

Jankensgård, Håkan, The Fundamental Agency Problem: Ownership, Monitoring, and Voluntary Disclosure (September 22, 2015). Available at SSRN: https://ssrn.com/abstract=2664259 or http://dx.doi.org/10.2139/ssrn.2664259

Håkan Jankensgård (Contact Author)

Lund University - Department of Business Administration ( email )

Box 117
SE-221 00 Lund, S-220 07
Sweden

Knut Wicksell Centre for Financial Studies ( email )

Box 7080
Lund, SE-220 07
Sweden

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