The analysis of agency cost within state-ownership structures of the airline industries: Direct state-owned companies and indirect state-owned companies (ownership via sovereign wealth fund)
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School of Business |
Bachelor's thesis
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Authors
Date
2018
Department
Major/Subject
Mcode
Degree programme
(Mikkeli) Bachelor’s Program in International Business
Language
en
Pages
47
Series
Abstract
Objectives This study is conducted to investigate the significance of the two ownership structures, namely direct state-ownership and indirect state-ownership, in the context of airline companies. The research also extends to examine the underlying reason for the implied distinctions. Agency cost is the main measure used to compare the efficiency between the two ownership structures. This paper also seeks to test out the relative importance of each characteristic in relation to agency cost. Summary The findings supported two hypotheses: (H2) indirect state-owned enterprise has lower agency cost due to greater use of debt and (H4) indirect state-owned enterprise has lower agency cost due to the international diversification. The findings, however, rejected the two remaining hypotheses: (H1) indirect state-owned enterprise has lower agency cost due to greater transparency pressures and (H3) indirect state-owned enterprise has higher agency cost due to the international diversification. Conclusions In the comparison between indirect and direct state-owned airline companies, it is evident that indirect state-owned airlines performed more efficiently than direct state-owned airlines.Description
Thesis advisor
Grinsted, SusanKeywords
agency cost, airlines, state-ownership, sovereign wealth fund