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THE IMPACT OF AGENCY COSTS ON FIRM PERFORMANCE: EMPIRICAL EVIDENCE FROM REAL ESTATE COMPANIES LISTED ON VIETNAM STOCK EXCHANGE
Keywords:
agency theory, agency costs, firm performance, real estate, Vietnam Stock ExchangeDOI:
https://doi.org/10.17654/0972361724079Abstract
Agency costs are a crucial aspect of corporate governance, with various perspectives and existing measurement methods. Many empirical studies have highlighted that asset turnover and the ratios of general, administrative, and sales expenses to total revenue are commonly used metrics to evaluate agency costs within firms. To quantify the impact of agency costs on the firm performance of listed real estate companies in Vietnam, this study uses panel data regression to determine the impact of agency costs on the firm performance of real estate companies listed on the Vietnam Stock Exchange from 2013 to 2022, encompassing 590 observations. We use panel data regression with fixed effects model (FEM) or random effects model (REM), depending on the relevance of the models. We also exploit feasible generalized least squares (FGLS) to address issues of heteroskedasticity and autocorrelation in the error terms of the model. The results indicate the presence of agency costs in these firms. Specifically, the ratio of general and administrative expenses to total revenue positively affects firm performance, while asset turnover and debt ratio negatively impact it. Firm size positively impacts ROE but negatively affects ROA.
Received: June 21, 2024
Revised: August 12, 2024
Accepted: September 10, 2024
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