The differential effects of agency costs on multinational corporations: Theory and evidence.

The corporate form of business organization has associated with it potentially significant agency costs. These costs arise principally from the separation of ownership and control interests in the firm. While it is widely believed that multinational corporations (MNCs) with substantial foreign market exposure face higher agency costs than less-exposed MNCs or domestic firms, empirical evidence in support of this contention is largely absent from the literature. This dissertation uses capital market data to empirically examine the theory that multinational corporations with substantial exposure to foreign markets incur greater agency costs than less-exposed MNCs or domestic corporations.