The Relationship between Corporate Governance Mechanisms and the Agency Costs in the Agency Theory Framework

The growth of economic activities and distribution of the ownerships of the firms has made it unavoidable to distinguish between ownership and management. The growth of economic markets and rise of investment in investment markets especially in stock market would take place when the interests of both the managers and the owners are parallel. Corporate governance is used with an emphasis on decreasing and limiting the disparity between the interests and controlling the costs of representatives. The current research aims at determining the relationship between the mechanists of corporate governance with the agency costs. For the purpose of testing the hypotheses we used the method of regression of mixed data with 952 samples of year-firm through three models. The results of the tests show that variables of the ownership concentration, institutional ownership, managing ownership, and the auditor size in the first model and variables of ownership concentration and institutional ownership In the second model and the variable of independence of the managers In the third model show a significant relationship with index of agency costs. Finally, in the fourth model, institutional ownership variable has a significant relationship with interaction between the growth of the firm and cash flow.