IDEAS home Printed from https://ideas.repec.org/a/rss/jnljef/v4i2p3.html
   My bibliography  Save this article

Corporate Board Attributes And Agency Cost: Evidence From Listed Companies In Ghana

Author

Listed:
  • Peter Kwame Kuutol
  • Ebenezer Badu Agyemang

Abstract

Using a penal data approach, we aim at finding evidence whether board attributes affect agency cost of listed non-financial companies from 2005-2013 in Ghana. In this paper, concentration was on board attributes ignored by previous studies. Using assets turnover (utilization) as a measure of agency cost and controlling for size, our results reveal that board size and board independence are statistically and inversely related to agency cost. However, board gender diversity was found to be positively related to agency cost. It was also discovered that boards of the listed firms who are being dominated by male directors helped in mitigating the agency cost.

Suggested Citation

  • Peter Kwame Kuutol & Ebenezer Badu Agyemang, 2015. "Corporate Board Attributes And Agency Cost: Evidence From Listed Companies In Ghana," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(2), pages 86-96.
    • Handle: RePEc:rss:jnljef:v4i2p3
    as

    Download full text from publisher

    File URL: http://rassweb.org/admin/pages/ResearchPapers/Paper%203_1497099704.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Geoffrey C. Kiel & Gavin J. Nicholson, 2003. "Board Composition and Corporate Performance: how the Australian experience informs contrasting theories of corporate governance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(3), pages 189-205, July.
    2. Michael C. Jensen, 2010. "The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 22(1), pages 43-58, January.
    3. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    4. Henry, Darren, 2004. "Corporate governance and ownership structure of target companies and the outcome of takeovers," Pacific-Basin Finance Journal, Elsevier, vol. 12(4), pages 419-444, September.
    5. John A. Pearce & Shaker A. Zahra, 1992. "Board Composition From A Strategic Contingency Perspective," Journal of Management Studies, Wiley Blackwell, vol. 29(4), pages 411-438, July.
    6. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    7. Ali, Muhammad & Raza, Syed Ali, 2015. "Factors affecting to select Islamic Credit Cards in Pakistan: The TRA Model," MPRA Paper 64037, University Library of Munich, Germany.
    8. James S. Ang & Rebel A. Cole & James Wuh Lin, 2000. "Agency Costs and Ownership Structure," Journal of Finance, American Finance Association, vol. 55(1), pages 81-106, February.
    9. repec:aer:wpaper:149 is not listed on IDEAS
    10. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    11. Niamh Brennan, 2006. "Boards of Directors and Firm Performance: is there an expectations gap?," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(6), pages 577-593, November.
    12. Khaled Aljifri & Mohamed Moustafa, 2007. "The Impact of Corporate Governance Mechanisms on the Performance of UAE Firms: An Empirical Analysis," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 23(2), pages 71-93, December.
    13. Benjamin E. Hermalin & Michael S. Weisbach, 1988. "The Determinants of Board Composition," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 589-606, Winter.
    14. Syed Ali Raza & Nida Hanif, 2013. "Factors affecting internet banking adoption among internal and external customers: a case of Pakistan," International Journal of Electronic Finance, Inderscience Enterprises Ltd, vol. 7(1), pages 82-96.
    15. R. Edward Freeman & Andrew C. Wicks & Bidhan Parmar, 2004. "Stakeholder Theory and “The Corporate Objective Revisited”," Organization Science, INFORMS, vol. 15(3), pages 364-369, June.
    16. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-325, June.
    17. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563, Elsevier.
    18. Byrd, John W. & Hickman, Kent A., 1992. "Do outside directors monitor managers? *1: Evidence from tender offer bids," Journal of Financial Economics, Elsevier, vol. 32(2), pages 195-221, October.
    19. Singh, Manohar & Davidson III, Wallace N., 2003. "Agency costs, ownership structure and corporate governance mechanisms," Journal of Banking & Finance, Elsevier, vol. 27(5), pages 793-816, May.
    20. repec:eee:labchp:v:3:y:1999:i:pb:p:2485-2563 is not listed on IDEAS
    21. Niclas L. Erhardt & James D. Werbel & Charles B. Shrader, 2003. "Board of Director Diversity and Firm Financial Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(2), pages 102-111, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Naeem Tabassum & Satwinder Singh, 2020. "Corporate Governance and Organisational Performance," Springer Books, Springer, number 978-3-030-48527-6, July.
    2. Afzalur Rashid, 2015. "Revisiting Agency Theory: Evidence of Board Independence and Agency Cost from Bangladesh," Journal of Business Ethics, Springer, vol. 130(1), pages 181-198, August.
    3. Julan Du & Charles Ka Yui Leung & Derek Chu, 2014. "Return Enhancing, Cash-rich or simply Empire-Building? An Empirical Investigation of Corporate Real Estate Holdings," International Real Estate Review, Global Social Science Institute, vol. 17(3), pages 301-357.
    4. McKnight, Phillip J. & Weir, Charlie, 2009. "Agency costs, corporate governance mechanisms and ownership structure in large UK publicly quoted companies: A panel data analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 139-158, May.
    5. Mukesh Nepal & Rajat Deb, 2022. "Board Characteristics and Firm Performance: Indian Textiles Sector Panorama," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 47(1), pages 74-96, February.
    6. ATM Adnan & Nisar Ahmed, 2019. "The Transformation Of The Corporate Governance Model: A Literature Review," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(3), pages 7-47.
    7. Nooraisah Katmon & Omar Al Farooque, 2017. "Exploring the Impact of Internal Corporate Governance on the Relation Between Disclosure Quality and Earnings Management in the UK Listed Companies," Journal of Business Ethics, Springer, vol. 142(2), pages 345-367, May.
    8. Muhammad Imran Nazir & Muhammad Zulfiqar & Muhammad Bilal Saeed & Yasir Habib, 2016. "The Influence of Board Characteristics on Shareholders Assessment of Risk for Small and Large Firms: Evidence from Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 6(2), pages 596-606.
    9. Ratnam Vijayakumaran, 2019. "Agency Costs, Ownership, and Internal Governance Mechanisms: Evidence from Chinese Listed Companies," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(1), pages 133-154, January.
    10. Panagiotis Staikouras & Christos Staikouras & Maria-Eleni Agoraki, 2007. "The effect of board size and composition on European bank performance," European Journal of Law and Economics, Springer, vol. 23(1), pages 1-27, February.
    11. Aziz Jaafar & Lynn Hodgkinson & Mao-Feng Kao, 2019. "Ownership Structure, Board of Directors and Firm Performance: Evidence from Taiwan," Working Papers 19011, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    12. repec:mth:ijafr8:v:8:y:2018:i:3:p:256-277 is not listed on IDEAS
    13. Phillip C. James, 2020. "Understanding the Impact of Board Structure on Firm Performance: AComprehensive Literature Review," International Journal of Business and Social Research, LAR Center Press, vol. 10(1), pages 1-12, January.
    14. Phillip C. James, 2020. "Understanding the Impact of Board Structure on Firm Performance: AComprehensive Literature Review," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 10(1), pages 1-12, January.
    15. Omar Al Farooque, 2021. "Agency-Linked Risk Management with Ownership and Board Sub-Committee Governance: Evidence from an OECD Economy," JRFM, MDPI, vol. 14(10), pages 1-16, October.
    16. Riyanka Baral & Debasis Patnaik, 2021. "Banking Governance Parameters Differentiated by size: Impact on Agency Cost," Indian Journal of Corporate Governance, , vol. 14(1), pages 86-109, June.
    17. Basma Sellami Mezghanni, 2009. "Investissement En R&D Et Performance De L'Entreprise : L'Effet Moderateur De La Gouvernance D'Entreprise," Post-Print halshs-00459415, HAL.
    18. Nguyen, Tuan & Locke, Stuart & Reddy, Krishna, 2014. "A dynamic estimation of governance structures and financial performance for Singaporean companies," Economic Modelling, Elsevier, vol. 40(C), pages 1-11.
    19. Agyenim Boateng & XiaoGang Bi & Sanjukta Brahma, 2017. "The impact of firm ownership, board monitoring on operating performance of Chinese mergers and acquisitions," Review of Quantitative Finance and Accounting, Springer, vol. 49(4), pages 925-948, November.
    20. Eric M. Bosire & Vincent O. Ongore, 2015. "Effects of Board Composition on Financial Performance: Empirical Analysis of Companies Listed at the Nairobi Securities Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 5(1), pages 23-43.
    21. Akshita Arora & Chandan Sharma, 2015. "Impact of Firm Performance on Board Characteristics: Empirical Evidence from India," IIM Kozhikode Society & Management Review, , vol. 4(1), pages 53-70, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rss:jnljef:v4i2p3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Danish Khalil (email available below). General contact details of provider: http://www.rassweb.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.