Agency Conflicts in Asean 5: Are the Conflicts Between Principal-Agent or Principal-Principal?

This paper provides an empirical investigation into the changes of proxies for principal-principal (PP) conflicts and the espoused principal-agency (PA) conflicts in Asean 5 companies associated with mergers and acquisitions (M&A). By employing a final sample of 807 public listed, acquiring companies that had completed at least one M&A exercise within a duration of 8 years period, it was found that three measures of dividend payout ratios of the sample companies vary noticeably in the second year after the M&A becomes effective. However, proxy for PA conflicts via asset utilisation ratios, do not indicate any significant changes yearly or even pre- and post-M&A. This supports the view that principal-agent or PA conflicts may not be the agency problem in Asean 5 but rather the conflicts is within the shareholders themselves; vis a vis, large shareholders seem to expropriate the minority shareholders by paying themselves higher dividends post M&A.