Abstract

Based on the agency theory, this study first summarizes and develops hypotheses of factors that determine ownership structure, capital structure, firm value, respectively. Using the factor analysis and 3SLS model to test these hypotheses on the Taiwan stock market, the empirical results suggest: (1) those hypotheses of factors that determine ownership structure and capital structure are supported. (2) The ownership structure is positively, and the capital structure is negatively related to the firm value is also supported. That indicates the lack of mechanism of reducing agency problem on Taiwan stock market induces the significant debt and equity agency costs to have a negative effect on firm value. (3) There exists an interrelation between capital structure and ownership structure.