冷E函砂h吐1詰詰;:3;i;;置 ;zE主主 E ::: :: :
、仁王]--0033
Table 8 is the evaluation chart for the mediating effect of agency costs on the influence of
c。中orate
governance on firm performance. The model fit indicates that aside from the chi-square value significance, which is easily influenced by the number of samples, the comparative fit index is below standards, while the other fit indices have all reached acceptable standards.Table 9 shows the direct effect and the mediating effect among corporate governance, agency costs, and firm performance. The chart indicates that after inc1uding the mediating effect of agency costs, corporate governance still has a positive significant correlation with firm performance (coefficient -0.3 7*
(-0.77) = 0.2849, t-value = 6.95) as compared to the mediating effect of uncontrolled agency costs (coefficient = 0.10) on firm performance.
Since the direct effect of
c。中orate
governance on firm performance is not significant, agency costs have only a partial mediating effect on the influence of corporate governance on firm performance. The above results indicate that corporate governance can increase performance through direct positive influence on firm performance and through decreasing agency costs. The results show that Taiwanese firms' corporate governance has both beneficial and maladministration-mitigating functions. These provide evidence that in128 How Does Corporale Goνernance Affecl Firm Performance?
The Mediating Ro/e of Agency Costs
investigating the influence of corporate governance on firrn perforrnance, the mediating role of agency costs must be included. This is consistent with the hypothesis that this study has proposed.
Table 8
Evaluation Chart for the Mediating Effect of Agency Costs on the Influence
。f
Corporate Governance on Firm PerformanceOverall model fit Chi-square value is insignificant, indicating a good model fit
GFI <三 0.90
RMSEA<O肘 (excellent fit);
0.05 - 0.08 (good fit);
Chiao Da Managemenl ReνiewVol. 30 No. 2, 2010 129
4.4.
Equity Structure,
Composition of Directors and Supervisor,
and Related Party Transactions
In this
sωdy，
corporate govemance is made up of three latent variables:ownership structure, composition of directors and supervisors, and related
par句F
transactions. Since previous studies found both positive and negative effects among these three variables, we investigated their effects on agency costs separately. The purpose of this is to avoid the offsetting of positive and negative effects from each latent variable, since ownership structure, composition of directors and supervisors, and related party trading have different effects on corporate govemance.
Figure 5 shows the mediating effect of agency costs on the influence of the composition of directors and supervisors on firm performance. After control1ing for the effect of agency cost, the composition of directors and supervisors has increased firm performance (coefficient -0.5*(-0.79)
=
0.395, t-value=
6.85).Table 10 is the evaluation chart for the mediating effect of agency costs on the inf1uence of the composition of directors and supervisors on firm performance.
The resu1ts show that aside from the easily inf1uenced chi-square values, two comparative fit measures are below standards, while the other fit measures showed an acceptable fit.
Figure 6 shows the mediating effect of agency costs on the inf1uence of equity structure on firm performance, after controlling for the
e宜ect
of agency costs, ownership structure has helped increase firm performance(coe伍的nt
-0.24 *(一0.78)
= 0.1872, t-value = 5.07). Table 11 is the evaluation chart for the mediating effect of agency costs on the inf1uence of equity structure on firm performance. The results show that aside from the easily influenced chi-square value, the comparative fit index measures are all below standards, while the other fit measures show acceptable standard values.130 Ho帥wD卸oe，臼s c.αor，伊po仰rat仿eGωOν附e凹r鬥阱'n叩lceAj，加伶伽ct F.扔irmPe吃柚治 rma仰n悶Cαe?
The Mediating Ro/e 01 Agency Costs
Table 9
The Direct and Mediating Effects among Corporate Governance
,
AgencyCosts
,
and Firm PerformanceDirect Effect t-value Corporate govemance on
firm performance 0.10 6.21 ***
Corporate govemance on
agency costs -0.68 -3.55***
Corporate govemance on
agency costs -0.37 -2.91***
Agency costs on firm
performance -0.77 -2.82***
Mediating Effectl t-valuez
0.2849 6.95***
Mediating effect is calcu1ated as (-0.37 * (-0.77) = 0.2849)
* * * Indicates that a 1 % significance is achieved
Figure 5
The Mediating Effect of Agency Costs on the Influence of the Composition of Directors and Supervisors on Firm Performance
. 8 …
0821 " DRC I \
0.
921 DRD 1_ 0
0811DR
cJ'l /
有且這
。〈。 可 相…也
Chi-Squar~=159.49 ， df=25, P-va~ue= 口口口口口口， RMSEA= 口.口33
Chiao Da Management ReviewVo/. 30 No. 2, 2010 131
Table 10
Evaluation Chart for the Mediating Effect of Agency Costs on the Influence
。fthe Composition of Directorsand Supervisors on Firm Performance
Overal1 model fit - absolute fit index
Overal1 model fit
一comparative fit index
Overal1 model fit
- parsimonious fit index
Evaluation content Chi-square value is
insignificant ,indicating a good model fit GFI ~三 0.90
AGFI 這 0.90
SRMR < 0.05 (excel1ent fit);
0.05 - 0.08 (good fit);
0.08 - 0.10 (moderate fit);
> 0 .10 (poor fit)
RMSEA < 0.05 (excel1ent fit);
0.05 - 0.08 (good fit);
0.08 - 0.1 0 (moderate fit);
> 0.10 (poor fit)
NFI ~三 0.90
NNFI ~ 0.90 IFI ~三 0.90 CFI 去。 90 RFI 三 0.90 PNFI 益。 5
PGFI ~ 0.5 CN>200
Results 159.49(P = 0.00)
0.99
。.99
0.026
0.033
0.91 0.89 0.93 0.92 0.87
。.63
。 55 1380.63
132 How Does Corporate Goνernance AjJect Firm Pe柚rmance?
The Mediating Role 01 Agency Costs
Figure 6
The Mediating Effect of Agency Costs on the Influence of Equity Structure on Firm Performance
#'1
AQA1-
1.. 000.93 -←-戶。 2
司EE 油田
毛。可 尹@
0.05
O.zs
/
Chi-Square=289.45, df=25, p-value= 口 .000 口 0 ， RMSEA= 口.口 46
Figure 7 shows the mediating effect of agency costs on the influence of related party transactions on firm performance. Related party transactions has a positive but insignificant relationship with agency costs (coefficient = 0.01, t-value = 0.61); thus
,
agency costs has no mediating effect on the influence of related party transactions on firm performance. Table 12 is the evaluation chart for the mediating effect of agency costs on the influence of related party transactions on firm performance. The results show that aside from the easi1y influenced chi-square value, three comparative fit measures are below standards, whi1e the other fit measures were able to reach an acceptable standard fit.The above results indicate that the composition of directors and supervisors has the highest coefficient (0.395), higher than the overall corporate govemance coefficient value (0.2849), whi1e the ownership structure coefficient is a bit low (0.1872), but is still positive and significant. Although we find that related party transactions through agency costs has a negative effect on firm performance, the effect is not significant; thus, the mediated relationship among the three variables does not exist Nevertheless, we find that related party transactions will reduce firm performance and are positively correlated with agency costs. From the results of this study, we find that both beneficial and maladministration-mitigating
Chiao Da Management ReviewVol. 30 No. 2, 2010 \33
functions of corporate govemance common!y exist for Taiwanese firms, and that there is no !arge counter-effect in the measurement of corporate govemance.
Tab!e 11
Eva!uation Chart for the Mediating Effect of Agency Costs on the Influence of Equity Structure on Firm Performance
Overall model fit
Chi-square value is insignificant, indicating a good model fit
GFI ~三 0.90
Chiao Da Management Revi凹v~包1. 30No. 2, 2010 135
Table 12
Evaluation Chart for the Mediating effect of Agency Costs on the Influence of Related Party Transactions on Firm Performance
Overall model fit - absolute fit index
Overall model fit - comparative fit index
Overall model fit
- parsimonious fit index
Evaluati叫 ncontent Chi-square value is insignificant indicating a good model fit
GFI 這 0.90 AGFI 這 0.90
SRMR < 0.05 (excellent fit);
0.05 - 0.08 (good fit);
0.08 - 0.10 (moderate fit);
> 0 .10 (poor fit)
RMSEA < 0.05 (excelle叫tfit);
0.05 - 0.08 (good fit);
nor卜electronics
firms can also increase firm performance (coefficientO.肘，
t-value = 2.96); however, the coefficient is smaller as compared to that of the
5 When the coefficient for the influence of corporate governance on firm performance and the coefficient for the influence of corporate governance on agency costs are significant at the same time, the mediating effect of agency costs on the influence of corporate governance on firm performance is established. Therefore, a mediating e能cttest need not be carried out.
136 How Does Corporate Governance A，加ctFirm Pe祕rmance?
The Mediating Role 01 Agency Costs
electronics industry, with a coefficient ofO.28. The
e釘ect
of corporate govemance on agency costs cannot be contained, which implies that firrns within the electronics industry have better corporate govemance than non-electronics firrns.Between 2000 and 2002, the samples show that corporate govemance and firrn perforrnance have a positive but insignificant correlation (correlation = 0.28, t-value = 1.91), and the effect of corporate govemance on agency costs cannot be contained. After 2002, results indicate that there is a positive and significant correlation (coefficient = 0.26, t-value = 2.37) between corporate govemance and firrn perforrnance, corporate govemance has a negative and significant correlation with agency costs (coefficient = -0.67, t-value = -3.56), and the mediating effect of agency costs on the influence of corporate govemance on firrn perforrnance signifies that
c。中orate
govemance can first weaken agency costs and then improve firrn perforrnance (-0.34*
(-0.80) = 0.272). These results indicate that between 2003 and 2006, the effective role of corporate govemancecame 臼lly
into play, thereby improving both the beneficial and maladministration-mitigating functions of corporate govemance
5. Conclusions
This study has investigated the beneficial and maladministration-mitigating roles of corporate govemance. We have attempted to include the mediating effect of agency costs in our analysis of the effect of
c。中orate
govemance on firrn perforrnance. First, we tested for the direct effect ofc。中orate
govemance on firrn perforrnance (beneficial role) and the direct effect of corporate govemance on agency costs (maladministration-mitigating role). Then, we set out to prove the mediating effect of agency costs in the influence of corporate govemance on firrn perforrnance and examined whether these two functions can together improve firrn perforrnance.In the examination of direct
efiì闊的，
the empirical results show that corporate govemance and firrn perforrnance are positively and significantly correlated, whereas corporate govemance and agency costs are negatively and significantly correlated. The results for the mediating role of agency costs indicateChiao Da Managemenl Review 均 1. 30 No. 2, 2010 137
that corporate governance can first control for agency costs in a firm and then help improve firm performance. This is consistent with the expectations of our study.
With the inc1usion of agency costs as a mediating variable, corporate governance can control for agency costs and can increase firm performance. This indicates that reducing agency costs is an important way for the corporate governance of Taiwanese firms to increase firm performance, thus supporting the hypothesis proposed in this study. Due to the inc1usion of agency costs as a mediating variable, the inf1uence of corporate governance on agency costs and the inf1uence of agency costs on firm performance are significant. Therefore, agency costs only has a partial mediating effect in the inf1uence of
c。中orate goveIτlance
on firm performance, implying that the corporate governance of Taiwanese firms has both beneficial and maladministration-mitigating functions.
The main contribution of this paper lies in c1arifying the ambiguity concerning the relationship between corporate governance and firm performance;
for this purpose, agency costs are inc1uded as a mediator and the LISREL analysis was used. We believe that when the mediating effect is large, it can easily lead to an inability to determine whether the functions of corporate governance are effectively manifested or not. Only with the inc1usion of testing and the determination of a mediating variable wil1 the relationships between variables be apparent. By relying on a mediating variable, the beneficial and maladministration-mitigating functions of corporate governance can increase the strength of firm performance.
The
m句 or
limitation of this study is that LISREL is unable to analyze discontinuous variables; hence, we cannot set dummy variables in order to view a c1earer relationship between the variables in the study. Although we segregated samples before proceeding with the analysis, we could not test for al1 samples and control for industry and year effects at the same time. Future research could move further in this direction and find a framework for further analysis.138 How Does Corporate Goνernance Affect Firm PerfiJrmance?
The Mediating Ro/e 01 Agency Costs
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