Investigating the Effect of Financial Constraints and Different Levels of Agency Cost on Investment Efficiency

Subject Areas : Financial Mathematics

Mahdi Agah ¹ , Hossein Malekpoor ² , Arman Bagheri ³

1 - Department of Management and Accounting, Farahan Branch, Islamic Azad University, Farahan, Iran
2 - Department of Economic Sciences, Faculty of Management and Economic, Tarbiat Modares University, Tehran, Iran
3 - Department of Financial Management, Faculty of Business Management, Qom University, Qom, Iran

Received: 2017-12-18 Accepted : 2017-12-18 Published : 2017-12-01

Keywords: Agency costs, Investment Efficiency, financial constraints,

Abstract :

This research attempts to investigate the effect of financial constraints and different levels of agency costs on the investment efficiency of companies in Iran. Following the design of the financial risk assessment indexes, the transaction information was collected from the Stock Exchange in the five-year period of 2011-2015. The statistical sample consists of 128 companies selected by sampling method based on Cochran formula in which totally obtained 640 year-firm data. Linear regression and correlation were used to investigate the hypotheses of the research. Also Eviews software was used to analyse the data and test the hypotheses. What is summarized in the overall conclusion of the research hypothesis test is that financial constraints are effective on investment performance based on the indicators (kz) and (ww), as well as the various levels of agency costs, including high and low agency costs effect on investment efficiency.

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