Räntenivåns påverkan på agentkostnaden

Sammanfattning:

Background: Big and complex organizations usually separate the ownership and control. This

separation is most common when organizations grow too big and complex for a single owner to

handle. In such case, they hire a management team, responsible for managing the organizations

day to day operations. The separation of ownership and control brings a problem into the

corporate governance. The management team doesn’t always act in the interest of the owner.

This behavior refers to the agency problem and brings agency costs to the organization. A lot of

studies have focused on agency problem, agency costs and how these costs in the best way can

be reduced by mechanisms. The central mechanism for this thesis, the capital substitution

mechanism, reduces agency costs by the organizations interest expenses. Thus it doesn’t take

into account the interest rate of the economy, set by the central bank.

Purpose: The purpose of this thesis is to examine whether the interest rate of the economy

affects the mechanisms power to reduce agency costs.

Method: The thesis utilizes a deductive research method grounded in existing theory in agency

problem, agency costs, debt ratios and efficiency. The thesis utilizes a quantitative approach and

data of American companies to fulfill its purpose. To estimate the agency cost, this thesis

employs two different proxys for measuring agency costs.

Results: The results from this study can’t draw and conclusions about whether the interest rate

of the economy affects the capital substitution mechanisms power to reduce agency costs.

However it shows that the management team got bigger opportunities to engage in agency cost

related activities when interest rates are low compared to a high interest rate environment