Determinants of agency cost: Evidence from listed real Estate firms on the Vietnam Stock Exchange

Abstract

This study investigates the impact of corporate governance factors on agency problems in 42 listed real estate companies on the Vietnam stock exchange from 2013 to 2023, utilizing 462 observations and the Feasible Generalized Least Squares (FGLS) model. Despite growing attention to agency problems globally, research on Vietnam’s real estate sector remains limited, particularly regarding the role of governance mechanisms in mitigating these issues. The findings indicate that a higher proportion of board members involved in managerial roles, cash dividend policy, and the total debt-to-total assets ratio helps alleviate agency problems within firms. Conversely, board gender diversity presents challenges to decision-making efficiency, potentially leading to increased agency conflicts. Additionally, the analysis suggests that an optimal board size of 4 to 6 members enhances monitoring effectiveness, thereby strengthening corporate governance. These insights contribute to the understanding of agency costs in Vietnam’s real estate sector and offer valuable implications for policymakers and practitioners seeking to refine governance structures and improve corporate oversight.