Title: Agency costs, ownership structure and corporate governance mechanisms in Ghana

Authors: Andrews Owusu; Charlie Weir

Addresses: School of Economics, Finance and Accounting, Faculty of Business and Law, Coventry University, CV1 5FB Coventry, England, UK ' Aberdeen Business School, Robert Gordon University, AB10 7QE Aberdeen, Scotland, UK

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.

Keywords: agency costs; corporate governance; ownership structure; Ghana.

DOI: 10.1504/IJAAPE.2018.089414

International Journal of Accounting, Auditing and Performance Evaluation, 2018 Vol.14 No.1, pp.63 - 84

Accepted: 10 Mar 2017
Published online: 17 Jan 2018 *

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