Agency Costs of Publicly Traded Firms Owners in Turkey

Abstract

Stock markets play a significant role in terms of collecting the savings of individual investors and providing equity financing options for the companies. In most cases, individual investors cannot have a chance to represent themselves on the boards of the companies which they invest in. This situation causes investors to suffer from agency costs which are well defined in the corporate governance literature. This paper aims to define the agency costs of publicly traded equities owners in the Turkish stock market. All publicly traded companies in Borsa İstanbul included in the research, which covers the period between 2010 and 2018 which is after the global financial crisis in 2008. Findings of the study show that there is an adverse relationship between financial performance of the companies and the free float ratio. The companies with the higher free float ratios have the lowest profitability. On the other hand, the main shareholders tend to sell their stocks when the stock pricing and the company's periodic profitability is relatively high. The market perceived this as a negative signal and a negative relationship was observed between the free float change and the stock price performance.

Keywords

• kurumsal yönetim
• vekalet kuramı
• halka açık hisse senetleri
• pay senedi
• corporate governance
• agency theory
• publicly held equities
• equities