Agency theory and corporate governance principles: causes of inefficiency in Venezuelan state-owned companies

Juan Carlos Fonseca Sánchez    


The purpose of this research is to analyze the causes of loss of efficiency, profitability and bankruptcy, according to Transparency Venezuela (2020a, 2018) of 70% of the five hundred and twenty-six (526) companies held by the Venezuelan state since the current government began in 1999. To this end, the approach of the theory of agency and the principles of corporate governance allow us to demonstrate that the management or governance of a government (agent) with high indexes of perception of corruption and low institutional quality, are key, to understand some of the causes of the serious crisis that the country is experiencing. The banking system is taken as an example because it has been the focus of the government's nationalization actions since the first years. Through the use of two robust linear regression models it is shown that the government's management has not only involved a greater moral risk and agency cost but also a loss in the return on capital. The compulsory portfolios (with preferential interests to fulfill partisan and clientelistic purposes) has affected the efficiency of the banking system, which reflects the state of other nationalized companies.

pp. 113 - 126

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