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Agency costs, ownership structure and corporate governance mechanisms in Ghana

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  • Andrews Owusu
  • Charlie Weir

Abstract

This paper analyses the relationship between agency costs, ownership structure and corporate governance mechanisms in Ghana for the study period 2000-2009. Our results show that smaller board size and the presence of audit and remuneration committees decrease agency costs. We also find that higher managerial and institutional ownership reduces agency costs. However, duality and the proportion of non-executive directors on the board have no effect on agency costs, suggesting that not all board structure governance mechanisms are effective in mitigating agency costs. Interestingly, the non-board structure code recommendations such as improved shareholder voting rights, the adoption of International Financial Reporting Standards and auditor quality have also reduced agency costs. Overall, we find that the introduction of the Ghanaian Code played significant role in reducing agency costs.

Suggested Citation

  • Andrews Owusu & Charlie Weir, 2018. "Agency costs, ownership structure and corporate governance mechanisms in Ghana," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 14(1), pages 63-84.
    • Handle: RePEc:ids:ijaape:v:14:y:2018:i:1:p:63-84
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    Citations

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    Cited by:

    1. Andrews Owusu & Frank Kwabi & Ernest Ezeani & Ruth Owusu-Mensah, 2022. "CEO tenure and cost of debt," Review of Quantitative Finance and Accounting, Springer, vol. 59(2), pages 507-544, August.
    2. Omar Fareed Shaqqour, 2020. "Impact of Institutional Governance Tools on Reducing Agency Costs to Commercial Banks Listed in the Amman Stock Exchange," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 414-423, October.
    3. Baldacchino, Peter J. & Gatt, Jessica & Tabone, Norbert & Bezzina, Frank, 2018. "The Nomination Committee in Maltese Listed Companies," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 125-139, Governance Research and Development Centre (CIRU), Zagreb.
    4. Aleksandra Stoiljković & Slavica Tomić & Bojan Leković & Ozren Uzelac & Nikola V. Ćurčić, 2024. "The Impact of Capital Structure on the Performance of Serbian Manufacturing Companies: Application of Agency Cost Theory," Sustainability, MDPI, vol. 16(2), pages 1-25, January.
    5. Joe-Ming Lee, 2019. "Non-linear relationships among related party transactions, financial characteristics, corporate governance, and corporate value - Analysis of high-growth and low-growth food firms," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(3), pages 123-132.
    6. Rezvan Pourmansouri & Amir Mehdiabadi & Vahid Shahabi & Cristi Spulbar & Ramona Birau, 2022. "An Investigation of the Link between Major Shareholders’ Behavior and Corporate Governance Performance before and after the COVID-19 Pandemic: A Case Study of the Companies Listed on the Iranian Stock," JRFM, MDPI, vol. 15(5), pages 1-30, April.

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