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Agency costs, board structure and institutional investors: case of India

Author

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  • Pankaj Chaudhary

Abstract

Purpose - The author examines the role of board structure and institutional investors in dealing with the agency issues for the Indian firms by taking the data of NSE-500 nonfinancial firms for the period 2010–2019. Design/methodology/approach - The author applies dynamic panel data methodology to deal with endogeneity concerns prevalent in corporate finance variables. Findings - The agency view is consistent with the board size in the context of India. The author observed that the board size has a harmful effect on agency cost. A larger board size may create a coordination problem, or CEO may find it easy to thrust his or her decisions on board. The author also noticed that firms should have sizeable institutional ownership, particularly pressure-insensitive investors, in equity as they can reduce agency-related issues. Originality/value - This study focuses on one of the largest emerging economies, i.e. India.

Suggested Citation

  • Pankaj Chaudhary, 2021. "Agency costs, board structure and institutional investors: case of India," Asian Journal of Accounting Research, Emerald Group Publishing Limited, vol. 7(1), pages 44-58, May.
    • Handle: RePEc:eme:ajarpp:ajar-12-2020-0130
    DOI: 10.1108/AJAR-12-2020-0130
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