DETERMINANTS OF AGENCY COST : THE CASE OF STATED-OWNED ENTERPRISE

Abstract

An agency cost is a type of internal company expense, which comes from the actions of an agent acting on behalf of a principal. Agency costs typically arise in the wake of core inefficiencies, dissatisfactions, and disruptions, such as conflicts of interest between shareholders and management. The agent is given the authority to make decisions on behalf of the principal. However, the two parties may have different incentives and the agent generally has more information. These agency costs exist to overcome agency conflicts. Government companies need agency cost, therefore the question is what are the factors that influence agency cost? The aim of this research is to examine several factors that exist in companies, namely the influence of institutional ownership, company size, audit committee and leverage on agency costs in state-owned enterprise listed on the Indonesia Stock Exchange. This research uses secondary data. The number of samples identified using purposive sampling techniques was 13 firm, from 2018-2022. The method used in the research is the panel data regression method using a random effect model. The model chosen from the research results is Random Effect. The research results found that institutional ownership had a positive effect on agency costs. Company size, and leverage had a negative effect on agency costs and audit committee no effect on agency cost. Low agency costs are a very important thing. It is important for companies to attract investor interest