The effect horizons institutional investors on agency costs of debt contracts

In debt financing, according to the agency theory, the two parties to the contract, ie the borrower and the creditor, bear the agency costs. Institutional investor oversight mechanism can play a role in debt contracts. Therefore, the purpose of this study is to investigate the impact of institutional investors on debt contracts. For this purpose, the financial information of 118 companies listed on the stock exchange between 2014 and 2018 was used. Multivariate regression method with hybrid data approach was used to analyze the data. The results of data analysis showed that the outlook of short-term institutional investors has a positive effect on debt costs. Also, the outlook of long-term institutional investors has a negative impact on the cost of debt.