Empirical evidence in Japanese stock market: a principal-agency theory perspective

Abstract

In the past decade the agency researchers theorize that for all other things equal a firm run by owners (i.e. insiders) incurs smaller monitoring costs than a firm managed by management (i.e. outsiders). In this study, examining Japan equity markets, we provide empirical evidence consistent with this theory. We find that there is a significant relationship between the average growth rate of accounting variables under study and that of director shareholdings.