The Cost Of Equity-based Agency Empirical Study Of Corporate Governance

Principal-agent theory is the theory of modern Western corporate governance one of the main theories, its main point is the agency relationship which is produced by the separation of ownership and management have led to the presence of agency costs. The presence of agency costs, is not only not conducive to the allocation of social resources, resulting in a waste of company resources. but also damages the interests of shareholders and creditors. How to reduce agency costs, and solve the agency problem has become one of the hot issues.Based on two principal-agent relations of the two agency costs: equity agency costs and debt agency costs, equity agency costs are divided into two agency costs, one is the agency cost between shareholders and managers, the other is the agency cost between large shareholders and minority shareholders. This paper studies the first class of equity agency costs on firm performance. First, it introduced the theory of the formation of the reasons for equity agency costs, then from two aspects that is equity ownership concentration and equity nature, it analyzed the relationship between equity agency costs and corporate performance theoretically, and finally there is the empirical point of view of the deep-rooted relations between the two.Through empirical research, we demonstrate that a negative correlation between agency costs and firm performance is negatively only in the optimum corporate governance structure. In China, the corporate governance structure is not perfect and the ownership structure is special, the relationship between agency costs and firm performance may show a positive correlation. We believe that the reason for showing this relationship is mainly listed companies in china are mostly state-owned enterprises or enterprises from the restructuring, a higher proportion of state-owned shares, may enjoy the preferential tax treatment or access to national policy to protect, and thus corporate performance positive. Theoretical analysis of these empirical results would be more practical significance.Based on empirical results, from the perspective of agency costs, to improve for the purpose of improving corporate performance, end of the article from the four areas made a number of policy recommendations to improve the governance structure of listed companies in China: optimize the ownership structure; reduce state shareholding, improve the legal person shares, individual shares ratio; improve the managerial compensation incentives and the introduction of debt financing. I hope to have some practical significance that improve the quality of listed companies in China, and promote healthy and rapid development for capital markets.