DOI: 10.36347/sjebm.2015.v02i04.009

Pages: 379-382

Purpose of the study is to analyze the effectiveness and efficiency of monitoring power and performance of equity holders, who have ownership in blocks, in minimizing and controlling the agency cost in Pakistani firms. Asset utilization ratio is used as the proxy to measure the agency cost for equity holders. This study has been done by analyzing the financial and ownership data of top 100 (capitalization wise) of Pakistani manufacturing companies by using study window of 2006-2010. By using fix effect and random effect models of GLS regression, study found that agency cost decreases with the increase in the proportion of ownership of blockholders due to their greater monitoring power.