An Empirical Study of Outside Monitoring,Agency Problem and Corporate Value in Family Firms

• Main Authors: Mei-Chuan Lin, 林美娟
• Other Authors: 余惠芳
• Format: Others
• Language: zh-TW
• Published: 2012
• Online Access: http://ndltd.ncl.edu.tw/handle/24251456838838279103

碩士 === 清雲科技大學 === 國際企業管理研究所 === 100 === The objective of this study is to construct a credit risk model, using statistical methods, for investors, financial institutions and other stakeholders for the purpose of evaluating financial risks of a business concern so as to minimize potential financial risk losses. In this study, K-S test, M-U test, and logistic credit risk models were performed to determine whether the rise of agency problem might be associated with the separation of ownership and management, or otherwise; and to test socio-economic variables that could conceivably affect corporate performance and corporate valuation. The empirical results suggest that the separation of ownership and management could adversely affect corporate performance. Fist, reduce the debt-to-equity ratio as soon as possible to reduce the probability of having a financial crisis while enhancing corporate valuation. Second, reduce the cash flow ratio and the retention ratio to establish a safety margin to cushion asset realization losses. Third, the CEO should heed the auditing advices from an accountant. At the same time, outsider monitoring and corporate governance mechanism should be instituted and fortified. For companies with combined management and ownership, it is necessary to increase the cash flow per share and the cash flow ratio to minimize the probability of a financial crisis. Moreover, such companies should reduce the cash flow reinvestment ratio, increase the non-operating income and expense ratio, and diversify the business scope in order to reduce operation risks. Lastly, a combined management and ownership arrangement would can reduce agency problems and increase the forecasting capacity.