INTELLECTUAL CAPITAL AND AGENCY CONFLICT

Abstract

The purpose of this research is discusses about the effect of intellectual capital on agency conflict through investment decision, financing decision, and dividend policy. This research uses panel data with sample of 90 manufacturing firms listed in Indonesia Stock Exchange (IDX) between 2004-2013. The firm has complete financial report and data to support this research, and not suspend or delisting. This research uses three stages least squares estimation technique to test simultaneous model and z-clogg to compare coefficient between two models. Simultaneous model also show that negative effect of investment decision, financing decision, and dividend policy on value of the firm reduce with the existence of higher intellectual capital. Based on the analysis, it can be concluded that investment decision, financing decision, and dividend policy show agency conflict. Higher intellectual capital on the firm help to reduce agency conflict in the firm, so that it can be concluded that intellectual capital can direct the management behavior leading to decisions that increase the value of the firm.