Agency-Linked Risk Management with Ownership and Board Sub-Committee Governance: Evidence from an OECD Economy

Omar Al Farooque
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Omar Al Farooque: UNE Business School, University of New England, Armidale, NSW 2351, Australia

JRFM, 2021, vol. 14, issue 10, 1-16

Abstract: From a risk management perspective, this study examines the role of ownership and board sub-committee governance on direct measures of agency costs in a small OECD economy—New Zealand. Using Logistic and OLS regression approaches, two proxies of direct agency costs are tested on a pooled sample of 466 firm-year observations ranging from 2012 to 2018. The study provides evidence that insider ownership concentration outperforms outsider ownership concentration in constraining agency costs. Moreover, audit committee independence can also effectively deter agency costs. These findings suggest that both insider ownership concentration and audit committee structure are important risk management mitigating factor for deterring agency costs in New Zealand companies.

Keywords: risk management; direct measures of agency costs; ownership concentration; board sub-committee structure; New Zealand (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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