The impact of free cash flow, equity concentration and agency costs on firm’s profitability

  • Received March 7, 2017;
    Accepted March 29, 2017;
    Published June 1, 2017
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/imfi.14(2).2017.02
  • Article Info
    Volume 14 2017, Issue #2, pp. 19-26
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This paper examines how free cash flow and equity concentration are associated with agency costs, and how they influence the profitability of insurance firms listed on the Saudi Stock Market. The results indicate that equity concentration has no significant impact on agency costs, free cash flow has no significant impact on agency costs and agency costs have no significant impact on firm’s profitability. The findings of this study do not show any evidence to support the agency theory among insurance firms listed on the Saudi Stock Market.

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    • Table 1. Variables and measures
    • Table 2. Results of dynamic panel data two-steps robust system estimation