Agency Cost and Corporate Equity Financing policy of Quoted Manufacturing Firms in Nigeria: A Panel Data Study
Abstract
This study examined the effect of agency cost and equity financing policy of quoted manufacturing firms in Nigeria. Panel data were sourced from financial statement of the manufacturing firm’s from 2014-2023. Financing policy was poxied by equity capital while agency cost was measured by agency cost of debt, monitoring cost, executive compensation and director’s remuneration. Panel data methodology was employed while the fixed effects model was used as estimation technique at 5% level of significance. Fixed effects, random effects and pooled estimates were tested while the Hausman test was used to determine the best fit. Panel unit roots and panel cointegration analysis were conducted on the study. The study found that monitoring cost have negative effect while executive compensation and directors remuneration and agency cost of debt have positive effect on financing policy. From the findings, the study concludes that agency cost has significant effect on equity financing policy of the quoted manufacturing firms in Nigeria. We recommend among that internal and external factors such as corporate size, liquidity, capital structure that affect agency cost of the quoted manufacturing firms should be taken into consideration in formulating equity financing policy.
Keywords
Agency CostCorporate Equity financing policyManufacturing FirmsPanel Data
References
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