Agency Conflicts Around the World

Norman Schuerhoff, Boris Nikolov and Erwan Morellec
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Boris Nikolov: University of Lausanne
Erwan Morellec: Ecole Polytechnique Fédérale de Lausan

No 923, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We use a dynamic capital structure model to empirically measure agency conflicts across legal environments and decompose their effects into wealth transfers among stakeholders and value losses from policy distortions. Our estimates show that agency costs are large and vary widely across and within countries. Legal origin and provisions for investor protection affect agency costs, but they are more relevant for curtailing governance excesses than guarding the typical firm. Agency costs split about equally into wealth transfers and value losses from financial distortions, the latter being larger where ownership is dispersed. Incentive misalignment captures 60% of country variation in leverage.

Date: 2016
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Related works:
Journal Article: Agency Conflicts around the World (2018)
Working Paper: Agency Conflicts Around the World (2016)
Working Paper: Agency Conflicts Around the World (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:923

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