Financial leverage, growth, size, and their impact on agency costs: an analytical study of companies in the industrial and hotel sectors traded on the Iraqi Stock Exchange.

Abstract

This study aims to demonstrate the impact of some independent financial variables combined and separate (financial leverage and the size of companies and the growth rate) in the dependent variable (the agency cost) through the study and analysis of a sample of industrial companies and hotels listed in the Iraq Stock Exchange for the period of (2005-2014). The study using a range of financial metrics that represent the four variables (asset turnover as a proxy of cost Agency, and the proportion of debt as a measure of financial leverage ,Assets of company as a measure of the size and the market-to-book ratio as a measure of the rate of growth). The study concluded that the impact of these variables are combined in the agency cost varies depending on the sector as it was adversely affecting the industrial sector clearly influenced by the effect of the reverse effect for leverage on the agency costs in sense that the rise of these variables are generally leads to a decrease Agency costs, while It was a positive influence in the hotels sector, influenced by the impact of a significant inverse relationship of leverage on the agency costs, in that any interaction between these independent variables together increases the agency costs in the hotel sector.