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Agency costs in U.S. manufacturing: An empirical measure using X-efficiency

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Abstract

By adapting the concept of X-inefficiency, the deadweight cost associated with agency problems is estimated for U.S. manufacturing industry. X-inefficiency theory postulates that agent’s opportunistic behavior will lead to second-best outcomes in imperfect markets. When the methodology is applied to the 1986/87 fiscal year, thirty industries are identified as X-inefficient. The total deadweight agency cost generated by these industries amounts to some $76 million. On average, in any given industry, agency costs represent two-tenths of one percent of that industry’s annual sales.

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Authors and Affiliations

  1. California Polytechine State University, 93407, San Luis Obispo, CA

    John Dobson

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  1. John Dobson
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Dobson, J. Agency costs in U.S. manufacturing: An empirical measure using X-efficiency. J Econ Finan 16, 1–10 (1992). https://doi.org/10.1007/BF02919789

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  • DOI: https://doi.org/10.1007/BF02919789

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