BOARD STRUCTURE AND AGENCY COSTS
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Several features are used to measure board structure: board size, leadership, inside director ownership, outside director ownership, and proportion of outside directors. Among these features, only inside director ownership significantly affects agency costs, and its effect is non0linear. In addition, the paper shows that small firms tend to have lower agency cost than large firms when the CEO also acts as chairperson of the board. Direct evidence on the relationship between board structure and agency costs is provided; the findings have important implications to shareholders and policy makers
Abstract
Several features are used to measure board structure: board size, leadership, inside director ownership, outside director ownership, and proportion of outside directors. Among these features, only inside director ownership significantly affects agency costs, and its effect is non0linear. In addition, the paper shows that small firms tend to have lower agency cost than large firms when the CEO also acts as chairperson of the board. Direct evidence on the relationship between board structure and agency costs is provided; the findings have important implications to shareholders and policy makers