The Relationship Between Privatization, Corporate Governance Mechanisms and Regulation Environment Modification with Agency Costs in Previously Public Enterprises

This research investigates the impact of privatization on agency costs in privatized firms with considering corporate governance mechanisms and regulation environment modification . The proxies for corporate governance mechanisms are ownership concentration, independence of board of directors, managerial ownership, institutional ownership and audit quality and for agency costs is assets utilization ratio. Thus, information from 38 firms listed on Tehran Stock Exchange during 2003 to 2010 has been studied by considering certain characteristics (304 firm-year). The pooled data method has been used for data analysis and to examine hypotheses OLS method has been applied. The results reveal that agency costs of previously public enterprises significantly is increased after privatization. Moreover, agency costs has a significant relationship with ownership concentration, independence of board of directors, managerial and institutional ownership