Agency theory: An application of the relationship between ownership structure and performance in Turkish industrial firms

Financial sources have become more easily available in appropriate volume as a result of increasing mobility that stems from fastly developing capital markets providing new financial instruments and methods. Consequently, modern firm and corporate governance concepts as well as Agency Theory investigates these two is being extensively researched. Agency theory is an useful tool for analyzing modern firm which is defined as contractual relations. Agency problems and costs tfyat make the foundation of agency theory essentially investigate the conflict between firm ownership and management. In other words, this conflict arises due to "the transfer of control potential from the shareholders (principals) to the professionals (agents) detailed by contracts". However the actual problem is the quantifiable measurement of mentioned problems and costs rather than description of them. One of the most widely used methods in the literature is the comparison of performance changes between public and private firms. This study discusses the relationships and problems among the claimholders and resulting agency costs within the framework of agency theory. Along with. the discussion, establishing knowledge base for further analyses is targeted. Hence, this study investigates the applicability of agency costs on Turkish industrial firms by using cross-sectional and panel data analyses after developing parameters and models and* gathering relevant data. The empirical results indicate that different ownership structures do not have any effect on performance of Turkish firms. Keywords: Agency Theory, Agency Problems and Costs, Stakeholders, Firm Ownership Structure, Firm Performance