Influence of Board Composition on Agency Cost and Its Governance Outcomes

2020 ◽  
pp. 123-147
Author(s):  
Riyanka Baral ◽  
Debasis Patnaik
Keyword(s):  
Agency Cost ◽  
Board Composition

Banking Governance Parameters Differentiated by size: Impact on Agency Cost

2021 ◽  
pp. 097468622110070
Author(s):  
Riyanka Baral ◽  
Debasis Patnaik
Keyword(s):  
Small And Medium Enterprises ◽  
Agency Cost ◽  
Free Cash Flow ◽  
Board Composition ◽  
Board Structure ◽  
Board Diversity ◽  
Ceo Duality ◽  
Leverage Ratio ◽  
Small Banks ◽  
Medium Enterprises

Large banks and small banks can impact agency costs differently. The current study considers a panel data of 30 Indian banks before the merger to reveal the relationship between agency cost and board composition using panel regression models. The agency cost is reflected in three measures: Asset turnover ratio, free cash flow and leverage ratio. Board composition is sub-divided into three groups: board structure, board independence and board diversity. The finding of the study for large banks shows that former CEO, number of employee representatives on board, independent chairperson, CEO duality, bank age and size impacts agency cost. On the other hand, for small banks, results prove that bank age, employee representative on board and CEO duality significantly affects agency cost. Therefore, in the current Indian context of banking merger and governmental directives to increase lending to micro, small and medium enterprises, the focus should be shifted more on increasing managerial productivity and increasing leverage. Hence, the emphasis should not be on increasing governmental representatives on the banking board but to enhance bank governance quality and its monitoring. To this end, the current article can potentially provide valuable insights for sustainable and real economic outcomes.

scholarly journals The relationship between board size, board composition, CEO duality and firm performance: Experience from Ghana

2007 ◽  
Vol 4 (2) ◽  
pp. 114-122 ◽  
Author(s):  
Anthony Kyereboah-Coleman ◽  
Nicholas Biekpe
Keyword(s):  
Firm Performance ◽  
Panel Data ◽  
Agency Cost ◽  
Board Composition ◽  
Board Structure ◽  
Board Size ◽  
Clear Separation ◽  
Listed Firms ◽  
Data Framework ◽  
The Relationship

The paper examined board characteristics and its impact on the performance of non-financial listed firms in Ghana. Data covering 11 year period (1990-2001) was used and analysis conducted within the panel data framework. The study shows that most Ghanaian firms adopt the two-tier board structure and are largely non-independent. The regression results, though relatively mixed, confirm other studies and show that there should be a clear separation of the two critical positions of CEO and board chairman in order to reduce agency cost for enhanced firm performance.

Does Board Composition Matter to Institutional Investors?

2019 ◽  
Vol 18 (2_suppl) ◽  
pp. S238-S266
Author(s):  
Shashank Bansal ◽  
M. Thenmozhi
Keyword(s):  
Institutional Investors ◽  
Natural Experiment ◽  
Stock Exchange ◽  
Agency Cost ◽  
Resource Dependency ◽  
Board Composition ◽  
Board Independence ◽  
Jel Codes ◽  
The Difference

This study examines the resource dependency and signalling role of independent directors from the perspective of institutional investor’s and also investigates if the presence of large blockholder moderates the signalling effect. This study uses the quasi-natural experiment to examine this relationship. The difference-in-difference (DiD) analysis of 5,298 firm observations covering 618 National Stock Exchange (NSE) listed Indian firms for the period 2001–2011 provides empirical evidence that board composition does matter to institutional investors. We find that non-compliant firms who adopted the board independence requirement experience a significant increase in institutional ownership relative to previously compliant firms. We also find that institutional investors have invested more in family-owned firms during post-mandate period compared to government-, private- and foreign-owned firms. Overall, this study contributes to the existing literature on resource dependency theory and signalling theory and shows that the board independence acts as a signal to institutional investors and decreases the agency cost and cost of monitoring. JEL Codes: G3, G11, G34, G38, G23

scholarly journals Corporate Financing and Firm Efficiency: A Data Envelopment Analysis Approach

2019 ◽  
Vol 58 (1) ◽  
pp. 1-25
Author(s):  
Imad Rahim ◽  
Attaullah Shah
Keyword(s):  
Data Envelopment Analysis ◽  
Firm Performance ◽  
Stock Exchange ◽  
Agency Cost ◽  
Least Square ◽  
Board Composition ◽  
Data Envelopment ◽  
Firm Efficiency ◽  
Positive Effects ◽  
Franchise Value

This study investigates the endogenous determination of firm efficiency and leverage while testing the competing hypotheses of agency cost, efficiency-risk and franchise-value, in a sample of 136 non-financial firms listed on the Pakistan Stock Exchange (PSX), over the period 2002 to 2012. Data Envelopment Analysis (DEA) method is employed to measure firm efficiency as proxy for firm performance. The endogenous nature of firm efficiency and leverage allowed using two-stage least square (2SLS) technique. The findings of the efficiency equation suggest that leverage has a significant positive effect on firm efficiency. Additionally, firm risk, growth rate, size, board size and board composition positively affect firm efficiency. On the other hand, the results of the leverage equation suggest that firm efficiency has a significant negative effect on leverage. Firm size and CEO duality have positive effects on leverage while firm age, board composition, institutional ownership, managerial ownership and asset tangibility have negative effects on leverage. Generally, the results support agency cost and franchise-value hypotheses that higher leverage improves firm efficiency while higher firm efficiency results in reduced leverage. Keywords: Leverage, Firm Efficiency, Capital Structure, Firm Performance, Data Envelopment Analysis

scholarly journals Pengaruh Board Composition, Agency Cost, Likuiditas Dan Leverage Terhadap Financial Distress Pada Perusahaan Manufaktur Yang Terdaftar Di Bursa Efek Indonesia

2021 ◽  
pp. 69-81
Author(s):  
Lusiana ◽  
Indriyenni
Keyword(s):  
Financial Distress ◽  
Agency Cost ◽  
Board Composition

Penelitian ini bertujuan untuk mengetahui pengaruh Board Composition, Agency Cost, Likuiditas dan Leverage terhadap Financial Distress pada perusahaan manufaktur sektor aneka industry yang terdaftar di BEI tahun 2012-2016. Metode analisis yang digunakan adalah metode analisis linear berganda dan uji hipotesis dengan menggunakan data laporan keuangan perusahaan periode 2012-2016. Hasil Penelitian menunjukkan : 1) secara parsial, Board Composition tidak berpengaruh signifikan terhadap Financial Distress. 2) Agency Cost berpengaruh signifikan terhadap Financial Distress.3) likuiditas tidak berpengaruh signifikan terhadap Financial Distress .4) Leverage tidak berpengaruh signifikan terhadap Financial Distress.5) sedangkan, secara simultan Board Composition, Agency Cost, Likuiditas dan Leverage berpengaruh signifikan terhadap Financial Distres pada perusahaan manufaktur sector aneka industry yang terdaftar di BEI tahun 2012-2016. Koefisien determinasi (????2) atas variabel Board Composition, Agency Cost, Likuiditas, dan Leverage terhadap Financial Distres sebesar 70.20% .

Does Diversity in The Boardroom Add Value to a Firm?

2018 ◽  
Vol 18 (5) ◽  
Keyword(s):  
Firm Performance ◽  
Panel Data ◽  
Firm Size ◽  
Significant Influence ◽  
Negative Influence ◽  
Positive Influence ◽  
Future Research ◽  
Board Composition ◽  
Board Diversity

This study examines whether board diversity affects firm performance. We investigate this study using panel data of a sample of S&P 500 firms during a 12 year period. After controlling for industry, firm size, and other board composition variables, we find that all three board diversity variables of interest – gender, ethnicity, and age have a significant influence on firm performance. While ethnicity and age have a positive influence on firm performance, it was found that gender has a negative influence. Implications for future research are discussed.

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