9. Influence of Board Composition on Agency Cost and Its Governance Outcomes

This paper explores the impact of board composition on agency costs of large and small commercial banks in India. Asset turnover ratio and leverage ratio are taken to measure agency costs. Board composition is measured under three categories, i.e., board structure, board independence, and board committee. Board size and employee representative on board were taken as a proxy of board structure. CEO duality and independent chairperson represent board independence. Audit committee meetings and board meetings per year have been taken as a proxy for the board committee. Multiple linear regression analysis was used to assess the relationship between the dependent and independent variables. The sample consists of 35 Indian commercial banks from the year 2008–2018. The finding of the study reveals that in large banks board structure, board independence, and board committee influence agency costs. While in the case of small banks, board structure and board committee impact agency cost.