The Effects of Agency Problems on the Financial Behavior, Performance, and Efficiency of German Industrial Stock Corporations

Using a catalog of seven agency problem identifier variables such as block ownership and market segment traded in, 237 German industrial stock corporations are analyzed for the time period 1986-1992. Five sectors are also analyzed separately. Agency-problem related differences in financial behavior, performance, and cost efficiency are tested for using t-tests for mean differences and logistic regressions. The cost efficiency is estimated via stochastic maximum likelihood frontier functions. Manager-controlled firms prefer free cash flows as predicted. Owners favor debt and avoid new stock issues. Contrary to theory, manager-controlled companies do not show a poorer performance than owner-controlled firms. They do, however, operate more inefficiently than firms controlled by owners.

Autorentext

The Author: J. Benedict Wolf was born in 1964 in Des Plaines, IL, USA. He first studied Roman Catholic Theology in Münster, Germany, and Angers, France. After obtaining his Diplom (Masters's Degree) he achieved a second Diplom in Economics in Münster. Then he worked as a research Assistant at the Department of Finance in Münster and the Department of Finance and Banking in Augsburg, Germany. There he finished his doctorate in July, 1998.

Inhalt

Contents: Empirical analysis of differences in the financial behavior, performance, and efficiency of German industrial stock corporations for various corporate governance categories (manager, owner, or creditor control).