The Role of Digital Twin Technology in Reducing Agency Costs (An Applied Study on Companies Listed on Saudi Stock Market)
DOI:
https://doi.org/10.31272/jae.i147.1298Keywords:
digital twin technology , reduction of agency costsAbstract
This study aims at identifying the role of digital twin technology in reducing agency costs in the companied listed on the Saudi Stock Market. The study population includes all companies listed on the Saudi Stock Market except those of financial or accounting nature (banks, insurance companies, and investment companies) which would yield inaccurate results relating to agency costs. The study sample was taken from the companies whose fiscal year ends on 13/10 of each year, and which are constantly listed on the Saudi stock market during the period from 2020 to 2023, having their yearly financial reports and data. The questionnaire was distributed to the executive directors and board members of companies in question. The sample size, according to the applied standards, was 70 companies and 380 items. The study concluded that the ratio of the utilization of assets contributing to the reduction of agency costs was low, that there was a positive relationship between digital twin technology and agency costs, and that digital twin technology contribute to the reduction of agency costs.
Downloads
References
Agrawal, A., Fischer, M., & Singh, V. (2022). Digital twin : From concept to practice, Journal of Management in Engineering, 38(3),pp, 602-612 . DOI: https://doi.org/10.1061/(ASCE)ME.1943-5479.0001034
Aharon, D. Y., Demir, E., & Siev, S., (2022). Real returns from unreal world, Market reaction to Metaverse disclosures, Research in International Business and Finance. 63(3),pp, 1-12. DOI: https://doi.org/10.1016/j.ribaf.2022.101778
Anshari, M., Almunawar, M. N., & Masri, M. (2022). Digital Twin: Financial Technology’s Next Frontier of Robo-Advisor, Journal of Risk and Financial Management, 15 (4),pp 163-176 . DOI: https://doi.org/10.3390/jrfm15040163
Attaran, M., Attaran, S., & Celik, B. G. (2023). The impact of digital twins on the evolution of intelligent manufacturing and Industry 4.0. Advances in Computational Intelligence, 3(3), 1-15. DOI: https://doi.org/10.1007/s43674-023-00058-y
Baykara, S., & Baykara, B. (2021). The impact of agency costs on firm performance: an analysis on BIST SME firms. PressAcademia Procedia, 14(1),pp, 28-32. DOI: https://doi.org/10.17261/Pressacademia.2021.1481
Bosse, D. A., & Phillips, R. A. (2019). Agency theory and bounded selfinterest , Academy of Management Review, 41(2),pp, 276-297. DOI: https://doi.org/10.5465/amr.2013.0420
ChiInelo, E., and Iyiegbuniwe, W. (2018). Ownership Structure, Corporate Governance and Agency Cost of Manufacturing Companies in Nigeria", Research Journal of Finance and Accounting, Vol.9, No.16, pp 16-26 .
Erkoyuncu, J. A., del Amo, I. F., Ariansyah, D., Bulka, D., & Roy, R. (2020). A design framework for adaptive digital twins. CIRP annals, 69(1),pp, 145-148 . DOI: https://doi.org/10.1016/j.cirp.2020.04.086
Gotz, C. S., Karlsson, P., & Yitmen, I., (2020). Exploring applicability, interoperability and integrability of Blockchain-based digital twins for asset life cycle management. Smart and Sustainable Built Environment. 11(3),pp 532-558 . DOI: https://doi.org/10.1108/SASBE-08-2020-0115
Gusni, T., Ameldinata, N. N. A., Sugiarto, S. F. R., Gunawan, S., & Nisa, Z.,(2021). The Effect of Leverage, Agency Cost and Firm Size on Firm Value, Psychology & Education, 58(1),pp 6214-6221.
Kamble, S., Gunasekaran, A., Parekh, H., Mani, V., Belhadi, A., & Sharma, R., (2022). Digital twin for sustainable manufacturing supply chains: Current trends, future perspectives, and an implementation framework. Technological Forecasting & Social Change, 176, 1-13. DOI: https://doi.org/10.1016/j.techfore.2021.121448
Khalaj, O., Jamshidi, M. B., Hassas, P., Hosseininezhad, M., Mašek, B., Stadler, C., & Svoboda, J., (2022). Metaverse and AI Digital Twinning of 42SiCr Steel Alloys. Mathematics. 11(1),pp, 1-23. DOI: https://doi.org/10.3390/math11010004
Kritzinger, W., Karner, M., Traar, G., Henjes, J., & Sihn, W. (2018). Digital Twin in manufacturing: A categorical literature review and classification. IFAC-Papers Online, 51 (11), pp,116-122. DOI: https://doi.org/10.1016/j.ifacol.2018.08.474
Lee, H., & Yang, H. (2023). Digital Twinning and Optimization of Manufacturing Process Flows. Journal of Manufacturing Science and Engineering, 145 (11),pp, 1-13 . DOI: https://doi.org/10.1115/1.4063234
Liezina, A., Andriushchenko, K., Rozhko, O., Datsii, O., Mishchenko, L., & Cherniaieva, O. (2020). Resource planning for risk diversification in the formation of a digital twin enterprise, Accounting, 6 (7), pp,1337-1344 . DOI: https://doi.org/10.5267/j.ac.2020.8.016
Lv, Z., Xie, S., Li, Y., Hossain, M. S., & El Saddik, A., (2022). Building the metaverse using digital twins at all scales, states, and relations. Virtual Reality & Intelligent Hardware. 4(6),pp, 459–470. DOI: https://doi.org/10.1016/j.vrih.2022.06.005
Mohamad Zaidi, N. H., Lim, C. H., & Razali, H. (2024). Mitigating the Energy Consumption and Carbon Emissions of a Residential Area in a Tropical City Using Digital Twin Technology: A Case Study of Bertam, Penang. Buildings, 14(3),pp, 1-12 DOI: https://doi.org/10.3390/buildings14030638
Nguyen, A. (2020). Corporate Governance and Agency Cost : Empirical Evidence from Vietnam, Journal of Risk and Financial Management,Vol 13(5), pp2-15 . DOI: https://doi.org/10.3390/jrfm13050103
Nusaputra, F., & Basana, S. R. (2020). The effect of agency costs, ownership structure, signaling, investment opportunities, size, financial leverage, and profitability on dividend policy of companies listed in Indonesian stock exchange, International Journal of Financial and Investment Studies (IJFIS), 1(2), pp,109-120. DOI: https://doi.org/10.9744/ijfis.1.2.109-120
Onaji, I., Tiwari, D., Soulatiantork, P., Song, B., & Tiwari, A., (2022). Digital twin in manufacturing: conceptual framework and case studies. International Journal of Computer Integrated Manufacturing. 35(8),pp, 831-858 . DOI: https://doi.org/10.1080/0951192X.2022.2027014
Qiu, Chan, Shien, Zhou, Zhenyu, Liu, Qi, Gao. and Jianrong Tan, (2019). Digital assembly technology based on augmented reality and digital twins a review Virtual Reality & Intelligent Hardware, Vol. (1), No (6), PP.. 597- 610. DOI: https://doi.org/10.1016/j.vrih.2019.10.002
Rojek, I., Mikołajewski, D., & Dostatni, E. (2021). Digital twins in product lifecycle for sustainability in manufacturing and maintenance. Applied Sciences, 11(1),pp,17- 31 . DOI: https://doi.org/10.3390/app11010031
Sadri, H., Yitmen, I., Tagliabue, L. C., Westphal, F., Tezel, A., Taheri, A., & Sibenik, G. (2023). Integration of blockchain and digital twins in the smart built environment adopting disruptive technologies A systematic review, Sustainability, 15(4),pp, 1-46 . DOI: https://doi.org/10.3390/su15043713
Segovia, M., & Alfaro, J. G., (2022). Design, Modeling and Implementation of Digital Twins. Sensors. 22(14),p 1-30. DOI: https://doi.org/10.3390/s22145396
Tang, T.Y., (2019). The value implications of tax avoidance across countries, Journal of Accounting, Auditing & Finance, 34(4) pp.615-638 . DOI: https://doi.org/10.1177/0148558X17742821
Tao, F., Qi, Q., Liu, A., & Kusiak, A. (2019). Data-driven smart manufacturing. Journal of Manufacturing Systems, 48 (Part C),pp, 157-169 . DOI: https://doi.org/10.1016/j.jmsy.2018.01.006
Tao, F., Zhang, H., & Zhang, C. (2024). Advancements and challenges of digital twins in industry. Nature Computational Science, 4(3),pp, 169-177 . DOI: https://doi.org/10.1038/s43588-024-00603-w
Tudor, Adriana, Tiron, Delia, Deliu, Nicoleta, Farcance, and Adelina, Dontu, (2021). Managing change with and through blockchain in accountancy organizations a systematic Literature review, Journal of Organizational Change Management, Vol (34), No (2) , PP, 477-506 . DOI: https://doi.org/10.1108/JOCM-10-2020-0302
Wenting Zhang, Chuang Lu, Shangkun Liang, (2023). More words but less investment : Rookie CEOs and firms’ digital transformations , China Journal of Accounting Research, Volume 16, Issue 3, pp, 148-162 . DOI: https://doi.org/10.1016/j.cjar.2023.100305
Wijaya, H. (2021). Agency Cost, Financial Performance, And Women in Board of Commissioners, Jurnal Keuangan dan Perbankan, 25(4),pp, 945-954 . DOI: https://doi.org/10.26905/jkdp.v25i4.5788
Yegon, C., Sang, J., Kirui, J. (2014). The Impact of Corporate Governance on Agency Cost: Empirical Analysis of Quoted Services Firms in Kenya, Research Journal of Finance and Accounting, 5 (12),pp,55-76 .
Downloads
Published
Issue
Section
License
Copyright (c) 2025 أ.م. د. محمد مختار السماني البشر
This work is licensed under a Creative Commons Attribution 4.0 International License.
The journal of Administration & Economics is an open- access journal that all contents are free of charge. Articles of this journal are licensed under the terms of the Creative Commons Attribution International Public License CC-BY 4.0 (https://creativecommons.org/licenses/by/4.0/legalcode) that licensees are unrestrictly allowedto search, download, share, distribute, print, or link to the full text of the articles, crawl them for indexing and reproduce any medium of the articles provided that they give the author(s) proper credits (citation). The journal allows the author(s) to retain the copyright of their published article.
Creative Commons-Attribution (BY) 
