Governance practices and agency cost in emerging market: Evidence from India. (8th June 2018)

• Record Type: Journal Article
• Authors: Katti, Supriya; Raithatha, Mehul
• Is Part Of: Managerial and decision economics. Volume 39:Number 6(2018)
• Page Start: 712
• Page End: 732
• Publication Date: 2018-06-08
• Subjects: Managerial economics -- Periodicals; Decision making -- Periodicals; Management -- Periodicals; 658.15
• DOI: 10.1002/mde.2940
• Languages: English
• ISSNs: 0143-6570

Abstract

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.