Studying the Relation between Agencies Costs and Economical Performance for Different Industries in Tehran’s Stock Exchange

Abstract: The aim of this research was to study the relation between agencies costs and economic performance for different industries in Tehran’s stock exchange. We have tried to determine whether the agency costs of firms accepted in Tehran’s stock exchange affect their economic performance. For testing the research hypothesizes, 92 firms were selected among those accepted in Tehran’s stock exchange during a 5 years period from 2006 to 2011 and then the research variables were evaluated. The dependent variable was firms’ economic performance, and the independent variable was agencies costs. Economic value added (EVA), refined economic value added (REVA), and market value added (MVA) were used to evaluate the research variables. Also variables such as capital structure, growth opportunity, and firm size were used as control variables in this research. The results obtained from hypothesizes test revealed that there is a positive and significant relation between agencies costs and economic performance, and the effectiveness rate was based on the kind of the industry. Among the control variables, firm size and growth opportunities had a positive and significant relation and capital structure had a negative and significant relation with the economic performance.

Keywords:

Agencies Costs , Economical Performance , Economical Value Added (EVA) , Refined