Management and firm characteristics : an empirical study on agency cost theory and practice on debt and equity issuance decision of listed companies in Sri lanka

Abstract

The research is about the corporate financing decisions based on capital structure theories, especial reference to agency cost theory and practice of listed companies in Sri Lanka. The result finds no evidence of perceived importance of agency cost theory of listed companies in Sri Lanka. As a result, the findings those CFOs of listed companies in Sri Lanka consider different factors on debt and equity issuance decisions. The research finds no significant association between management and firm characteristics and agency cost theory in corporate financing decisions. The conclusions drawn from this study were that the corporate financing decisions in relation to agency cost theory differ from developed countries to developing country in many ways such as Sri Lanka. However, for corporate financing decisions in relation to agency cost theory to have full impact on firm value like U.S.A and Europe countries, CFOs of listed companies in Sri Lanka should consider agency cost theory that are in line with corporate financing decisions.