This a is an empirical study of troubled (i.e. PN4) companies, and their agency costs to outsiders who invest in them, The sample consisted of companies each in three groups made up of PN4, positive economic profit and negative economic profit companies. The study finds that outside investors in PN4 companies incurred extreme agency costs compared to positive economic profit companies because of poor governance. Relative to the control group, PN4 companies had higher insider ownership, borrowing, and lower equity values. The study highlights the uniqueness of the Malaysian securities law that allows corporate insiders to proactively use monitoring mechanisms to lower agency costs.