Agency Costs of Controlling Shareholders' Share Collateral with Taiwan Evidence

Anlin Chen (), Lanfeng Kao () and Yi-Kai Chen
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Anlin Chen: Department of Business Management, National Sun Yat-Sen University, Kaohsiung 804, Taiwan
Lanfeng Kao: Department of Finance, National University of Kaohsiung, Kaohsiung 811, Taiwan

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2007, vol. 10, issue 02, 173-191

Abstract: Controlling shareholders' share collateral is a new source of the deviation of cash flow rights and control rights leading to minority shareholder expropriation. However, controlling shareholders' share collateral is not forbidden and has not received particular restriction leading to its popularity in the capital markets. Neglecting the potential agency costs resulting from controlling shareholders' share collateral would hurt the interests of creditors and minority shareholders. We need legal regulation on controlling shareholders' share collateral to reinforce corporate governance mechanism to protect the interests of creditors and minority shareholders.

Keywords: Agency costs; controlling shareholder; moral hazard; share collateral (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (10)

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DOI: 10.1142/S021909150700101X

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