Agency Relationship in Multinational Corporation (Headquarter to Subsidiaries Firm): Collectivism Culture of Indonesia
(Pages 2641-2645)S. Martono1, Pan, Wei-Hwa2, Arief Yulianto1,* and Angga Pandu Wijaya1
1Department of Management, Faculty of Economics, Universitas Negeri Semarang, Indonesia.
2Department of Business Administration, National Yunlin University of Science and Technology, Taiwan.
DOI: https://doi.org/10.55365/1923.x2023.21.283
Abstract:
The research aims to understand the differences in agency costs of multinational corporations (MNCs) caused by cultural variations between the headquarters in emerging countries and subsidiaries in developed countries. The data was collected from mining and energy sector companies listed on the Indonesia Stock Exchange from 2007 to 2022. The t-test was used to analyze 647 observation units, with 370 being domestic firms and 277 being MNCs. The findings reveal that MNCs have higher total assets and annual sales compared to domestic corporations. However, there was no significant difference in agency costs between them, as both were able to deploy assets for only 50 percent of total sales. Managers of MNCs in developed countries feel superior, and the shift from collectivism to individualism in the national culture for domestic firms has resulted in subsidiaries being reluctant to adopt management practices.
Keywords:
Agency Cost, Asymmetric Information, Culture of Multinational Corporation.
How to Cite:
S. Martono, Pan, Wei-Hwa, Arief Yulianto and Angga Pandu Wijaya. Agency Relationship in Multinational Corporation (Headquarter to Subsidiaries Firm): Collectivism Culture of Indonesia. [ref]: vol.21.2023. available at: https://refpress.org/ref-vol21-a283/
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