THE EFFECT OF CORPORATE GOVERNANCE ON AGENCY COSTS OF LISTED COMMERCIAL BANKS IN NIGERIA.

Abstract

This study investigates the impact of corporate governance on agency costs for a sample of twelve (12) listed commercial banks in Nigeria from 2011 to 2021. Corporate governance was measured by board size, board independence, and gender diversity, while agency costs were proxied by the expense ratio. The data was analyzed using a fixed-effects estimation technique. The findings show that board independence and gender diversity do not significantly affect agency costs. However, board size significantly negatively affects the agency costs of listed commercial banks in Nigeria. The study recommends increasing the board size of listed commercial banks in Nigeria. A larger board allows for the inclusion of directors with a wider range of skills, knowledge, and experiences.