Ownership, governance mechanisms, and agency costs in China's listed firms

Michael Arthur FIRTH, M. Y., Peter FUNG, M., Oliver RUI

Research output: Journal PublicationsJournal Article (refereed)peer-review


Our study analyses the relations among agency costs, ownership structure, and governance mechanisms in Chinese listed firms. We find that firms with foreign shareholders incur higher agency costs. Legal person shareholders, our proxy for institutional investors, and government ownership have no impact on the level of agency costs. We also find that boards with a majority of outside directors are not associated with lower agency costs. There is some evidence that concentrated ownership is associated with lower agency costs. Although Chinese listed firms have engaged in ownership and governance reform, this has not manifested itself in a reduction in agency costs.
Original languageEnglish
Pages (from-to)90-101
Number of pages12
JournalJournal of Asset Management
Issue number2
Publication statusPublished - 1 Aug 2008


  • agency costs
  • corporate governance

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