Empiircal Research Of Chinese Listed Company Size Effects On The Company Costs

With social economic developing, the organization of companies changes, inorder to solve the shortage of company funds, a lack of management ability ofinvestors and other issues, a large numbers of stock company appear, investors thatshareholders no longer control the management of the company. Separation ofownership and control becomes a regular phenomenon, and therefore generatesagency costs, the measures taken to reduce agency costs become an issue thatshareholders concern closely. Good governance of companies will reduce agencycosts, corporate governance include Ownership structure, Board governancemechanisms, Supervisory Board governance mechanisms, Management incentivesand other aspects, then those how to affect proxy costs? In recent years, China’seconomy is facing industrial transformation and upgrading in the industrial structureadjustment period. In the Central Economic Work Conference, the general secretaryXi Jinping said that, from the production capacity and the organization, the role ofsmall and micro enterprises become even more prominent. Premier Li Keqiang in thegovernment work report also raised, China in2014implement a proactive fiscalpolicy and prudent monetary policy effectively, and carry out targeted tax cuts anduniversality reduce costs, expand small businesses tax incentives. These have shownthat countries enhanced the support to small and micro enterprises, the role of smalland micro enterprises in China’s economic development is becoming increasinglyimportant. The rapid development of science and technology and the support ofnational preferential policy, have providing an opportunity to the development ofsmall and micro enterprises. Small and micro enterprises have mushroomed toemerge, and how it different size of the company affects the proxy costs?Under this background, this paper first conducts theoretical elaboration of thecompany size and the various aspects of the corporate governance how to affect agency cost, then make empirical analysis. Because of heterogeneity amongcompanies sectional data will affect the accuracy of the results, this paper selectsannual panel data from year2008to2013, and use quantile regression modelconducts empirical analysis, get the result of the company size how to impact onagency costs. Then classified company into small-scale, medium-scale, large-scaleaccording to the company size, conducting piecewise regression using panel data,obtained under different company size, company size how to impact on agency costs.Based on the above-mentioned study, conducting impact studies on the agency costsof company size based on corporate governance again. Obtained the result of howcompany size affect agency costs after controlling for the influence of the corporategovernance, and get the parties of corporate governance how to impact on agencycosts. In this paper, the results obtained indicate that company size and agency costswere negatively correlated in different company size, company size effect on agencycosts are very significant. Increase the proportion of the largest shareholder willreduce agency costs and ownership of the properties had no significant effect onagency costs. At different scale, the proportion of the second to the tenth largestshareholders, the board governance mechanism, the board of supervisor governancemechanisms and management compensation different effects on the agency costs.Finally, summarize the result of this research that company size, corporategovernance how to impact on agency costs, and puts forward a number ofsuggestions to be able to provide help for the company management.