Research on equity adjustment, agency costs and commercial bank performance: experimental evidence from China

ABSTRACT

This article studies the impact of options to adjust the performance of commercial banks from agency costs. In the shareholding structure of the adjustment process, considering changes in agency costs, only in agency costs no more than the commercial banks when new results, the company will have to adjust agent the cost of power stealth measure more just by reflecting the size of the incremental results. In addition, equity restructuring costs are the basis of agency governance and ownership structure has an important impact on agency costs. Through a few selected China 14 listed commercial banks’ 2007–2012 data, we show that the impact of performance of commercial banks on the proportion of the company’s largest shareholders is generally more significant; however, the impact of equity restriction on commercial banks was not as significant, as seen from the application of balanced panel data model analysis and the test results. However, the agency costs of commercial bank performance were significant also in a general state, indicating that equity adjustment activities of commercial banks’ cost perspective agency under the commercial bank performance significant changes are not large.

KEYWORDS:

• Equity adjustment
• agency costs
• commercial bank performance
• balanced panel model

JEL CLASSIFICATION:

• E66
• E44
• E59

Acknowledgements

This research was supported by National Natural Science Funds under Grant 41361102.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Funds [41361102].