Agency costs arise from the agency problem in which the majority of a company manager will act for their own interests than to maximize the achievement of corporate goals. Related to this, the principal must spend a greater amount of costs to monitor the agent. This is because a company is almost impossible to have zero agency cost in order to guarantee the manager will take optimal decisions of view of the interests of shareholders because of the great difference between them. The conflict between the principal and the agent can be reduced to align interests between principal and agent, one through insider ownership. Insider ownership is expected to directly benefit managers feel of any decisions taken, where this process is called the bonding mechanism, which is a process to align the interests of management through binding program management in the company's capital. This study uses a manufacturing company that has gone public in Indonesia Stock Exchange in 2011-2013 were analyzed by simple linear regression method. The results showed that agency costs can be reduced through bonding mechanisms, one of which is the managerial ownership, where managerial ownership shows a negatively and significant effect either partially or simultaneously.

Keywords: insider ownership, agency costs, bonding mechanism, manufacturing company, and simple linear regression method