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Governance practices and agency cost in emerging market: Evidence from India

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  • Supriya Katti
  • Mehul Raithatha

Abstract

In this study, we examine whether governance practices brings down agency cost. We find that board size, board attendance, and CEO duality are important governance characteristics that influence the agency cost. We also bring out systematic differences in governance practices of the business group affiliated firms and stand‐alone firms. Larger board and proportion of independent director helps in reducing the agency cost for group affiliated firms supporting monitoring hypothesis. On the other hand, the governance structure of stand‐alone firms supports commitment hypothesis where we observe that board busyness and CEO duality help in reducing the agency cost.

Suggested Citation

  • Supriya Katti & Mehul Raithatha, 2018. "Governance practices and agency cost in emerging market: Evidence from India," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 39(6), pages 712-732, September.
    • Handle: RePEc:wly:mgtdec:v:39:y:2018:i:6:p:712-732
    DOI: 10.1002/mde.2940
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    Cited by:

    1. Wafa Tariq Waqar, 2020. "Board size and acquisition outcome: The moderating role of home country formal institutional development," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 529-541, June.
    2. Samya Tahir & Mian Sajid Nazir & Muhammad Ali Jibran Qamar & M. Martin Boyer, 2022. "Ineffective implementation of corporate governance? A call for greater transparency to reduce agency cost," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1528-1547, July.

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