Agency costs of debt and monitoring
The purpose of this paper is to investigate how the debt structure of an organisation affects its demand and preference for monitoring costs in Malaysian business environment. Data is collected using primary and secondary sources. Multiple regression analysis is used. The findings indicate that debt...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
World Business Institute
2011
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| Online Access: | http://psasir.upm.edu.my/id/eprint/22804/1/Agency%20costs%20of%20debt%20and%20monitoring.pdf |
| _version_ | 1825925227509448704 |
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| author | Mustapha, Mazlina Che Ahmad, Ayoib |
| author_facet | Mustapha, Mazlina Che Ahmad, Ayoib |
| author_sort | Mustapha, Mazlina |
| collection | UPM |
| description | The purpose of this paper is to investigate how the debt structure of an organisation affects its demand and preference for monitoring costs in Malaysian business environment. Data is collected using primary and secondary sources. Multiple regression analysis is used. The findings indicate that debt structure have negative significant relationship with total monitoring costs. However the debt structure is not significant when the cost of directorship and auditing are compared. But when internal auditing and external auditing costs are compared, the result indicates that companies with high debt structure have significantly more external auditing costs. This result is consistent with prior studies and supports the notion that highly geared companies demand more external audit as the banks need the independent third party to verify the figures in the financial statements prepared by the management. |
| first_indexed | 2024-03-06T07:55:02Z |
| format | Article |
| id | upm.eprints-22804 |
| institution | Universiti Putra Malaysia |
| language | English |
| last_indexed | 2024-03-06T07:55:02Z |
| publishDate | 2011 |
| publisher | World Business Institute |
| record_format | dspace |
| spelling | upm.eprints-228042015-10-16T06:59:49Z http://psasir.upm.edu.my/id/eprint/22804/ Agency costs of debt and monitoring Mustapha, Mazlina Che Ahmad, Ayoib The purpose of this paper is to investigate how the debt structure of an organisation affects its demand and preference for monitoring costs in Malaysian business environment. Data is collected using primary and secondary sources. Multiple regression analysis is used. The findings indicate that debt structure have negative significant relationship with total monitoring costs. However the debt structure is not significant when the cost of directorship and auditing are compared. But when internal auditing and external auditing costs are compared, the result indicates that companies with high debt structure have significantly more external auditing costs. This result is consistent with prior studies and supports the notion that highly geared companies demand more external audit as the banks need the independent third party to verify the figures in the financial statements prepared by the management. World Business Institute 2011-07 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/22804/1/Agency%20costs%20of%20debt%20and%20monitoring.pdf Mustapha, Mazlina and Che Ahmad, Ayoib (2011) Agency costs of debt and monitoring. International Review of Business Research Papers, 7 (4). pp. 118-129. ISSN 1837-5685; ESSN: 1832-9543 http://www.irbrp.com/previous_issue/July/2011 |
| spellingShingle | Mustapha, Mazlina Che Ahmad, Ayoib Agency costs of debt and monitoring |
| title | Agency costs of debt and monitoring |
| title_full | Agency costs of debt and monitoring |
| title_fullStr | Agency costs of debt and monitoring |
| title_full_unstemmed | Agency costs of debt and monitoring |
| title_short | Agency costs of debt and monitoring |
| title_sort | agency costs of debt and monitoring |
| url | http://psasir.upm.edu.my/id/eprint/22804/1/Agency%20costs%20of%20debt%20and%20monitoring.pdf |
| work_keys_str_mv | AT mustaphamazlina agencycostsofdebtandmonitoring AT cheahmadayoib agencycostsofdebtandmonitoring |