Agency Problems and Corporate Governance Mechanisms in Indian Companies
Shaifali1, Raj Kumar Mittal2
1Shaifali, Research Scholar, USMS, GGSIP University, Dwarka, New Delhi, India.
2Raj Kumar Mittal, Professor Department of Management Studies, & Director Development, Guru Gobind Singh Indraprastha University, Sector 16 C, Dwarka, Delhi, India.
Manuscript received on 09 June 2019 | Revised Manuscript received on 14 June 2019 | Manuscript Published on 08 July 2019 | PP: 607-613 | Volume-8 Issue-8S3 June 2019 | Retrieval Number: H11370688S319/19©BEIESP
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© The Authors. Blue Eyes Intelligence Engineering and Sciences Publication (BEIESP). This is an open-access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: This research paper empirically examines the nature of relationship between agency cost and corporate governance mechanisms, and discusses the various internal and external corporate governance mechanisms that introduced to mitigate the agency problems in Indian companies. The descriptive statistics show that Indian companies are gradually moving towards compliance to the governance mechanisms. This research paper has utilized two alternative proxies for agency cost, Tobin’s Q and Free Cash Flow (FCF). The regression results on the proxy of agency cost (TOBIN’S Q) establish that the governance mechanisms are not viable corporate governance mechanisms. However, the findings prove that leverage and shareholders’ committees are the specific governance mechanisms, which mitigate the agency problems.
Keywords: Corporate Governance, Agency Conflicts, Moral Hazard, Leverage, Debt Maturity
Scope of the Article: Disaster Management