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Agency costs of debt and monitoring

Mustapha, Mazlina and Che Ahmad, Ayoib (2011) Agency costs of debt and monitoring. In: Annual Hawaii International Business Research Conference, 24-25 October 2011, Hilton Hawaiian Village Honolulu, Hawaii, USA.

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The purpose of this paper is to investigate how the debt structure of an organisation affects its demand and preference for monitoring costs in Malaysian business environment. Data is collected using primary and secondary sources. Multiple regression analysis is used. The findings indicate that debt structure have negative significant relationship with total monitoring costs. However the debt structure is not significant when the cost of directorship and auditing are compared. But when internal auditing and external auditing costs are compared, the result indicates that companies with high debt structure have significantly more external auditing costs. This result is consistent with prior studies and supports the notion that highly geared companies demand more external audit as the banks need the independent third party to verify the figures in the financial statements prepared by the management.

Item Type: Conference or Workshop Item (Paper)
Additional Information: ISBN : 978-0-9808279-3-4
Uncontrolled Keywords: Corporate governance and accountability
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: Tunku Puteri Intan Safinaz School of Accountancy (TISSA)
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 27 Dec 2011 03:20
Last Modified: 24 Apr 2016 06:50
URI: http://repo.uum.edu.my/id/eprint/4429

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