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The effects of board experience and independence on mitigating agency conflict

Author

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  • Ebenezer Agyemang Badu
  • Kingsley Opoku Appiah

Abstract

Purpose - The purpose of this paper is to investigate the impact of board experience and independence on mitigating agency conflict between shareholders and managers. Design/methodology/approach - This paper uses a panel data of 137 firms listed on stock exchanges in Ghana and Nigeria over a period of seven years. System generalized method of moments and other estimation techniques were adopted for the study. Using agency and resource dependence theories, board experience and independence ignored in previous studies are selected for the study. Findings - The findings of this paper indicate a negative and statistically significant relationship between board experience, board independence, and agency conflict. A further examination using an agency score computed from the principal factor analysis of the four main agency proxies indicates a significant and negative relationship between board independence and agency conflict, but a negative and statistically non-significant relation between board experience and agency conflict. Practical implications - The authors’ evidence has important implications for countries that are currently or contemplating pursuing board reforms to recommend the appointment of more independent and experience directors to corporate board. Originality/value - This paper introduces a new proxy for assessing human and social capital of directors to test the integration hypothesis of a unique data set from Ghana and Nigeria toward mitigating agency conflict.

Suggested Citation

  • Ebenezer Agyemang Badu & Kingsley Opoku Appiah, 2017. "The effects of board experience and independence on mitigating agency conflict," Journal of Accounting in Emerging Economies, Emerald Group Publishing Limited, vol. 7(4), pages 445-467, November.
    • Handle: RePEc:eme:jaeepp:jaee-08-2016-0072
    DOI: 10.1108/JAEE-08-2016-0072
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    Cited by:

    1. Abdul Azim Mohd Uzir, 2023. "Critical Insights into The Attributes of An Effective Board of Directors as A Deterrent to Corporate Fraud," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 10(1), pages 01-05, January.

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