Exploring the Effects of Agency Theory on Ownership Structures and Firm Performance

This paper deals with the principal - agent problem in the stakeholder context. This study also emphasizes that good governance mechanisms can only curtail the agency, moral hazards’ and hold-up problems connected with separation of ownership and control. Generally, ownership structure is considered an important factor in determining the value of the firm. However, the empirical results of this study state the ownership structure is not an only instrument to tackle the agency related problems. But, by reducing agency costs through effective ownership mechanisms will improve firm’s economic performance.