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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...

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Main Authors: Mustapha, Mazlina, Che Ahmad, Ayoib
Format: Article
Language:English
Published: World Business Institute 2011
Online Access:http://psasir.upm.edu.my/id/eprint/22804/1/Agency%20costs%20of%20debt%20and%20monitoring.pdf
http://psasir.upm.edu.my/id/eprint/22804/
http://www.irbrp.com/previous_issue/July/2011
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spelling my.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
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
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.
format Article
author Mustapha, Mazlina
Che Ahmad, Ayoib
spellingShingle Mustapha, Mazlina
Che Ahmad, Ayoib
Agency costs of debt and monitoring
author_facet Mustapha, Mazlina
Che Ahmad, Ayoib
author_sort Mustapha, Mazlina
title Agency costs of debt and monitoring
title_short 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_sort agency costs of debt and monitoring
publisher World Business Institute
publishDate 2011
url http://psasir.upm.edu.my/id/eprint/22804/1/Agency%20costs%20of%20debt%20and%20monitoring.pdf
http://psasir.upm.edu.my/id/eprint/22804/
http://www.irbrp.com/previous_issue/July/2011
_version_ 1643827895377854464
score 13.211869

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