IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 9 NO. 7 2023
DOI: https://doi.org/10.56201/jafm.v9.no7.2023.pg1.24

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Effect of Ownership Concentration on Agency Cost of Industrial Firms Listed on the Nigerian Exchange Group

Okafor, Oluchi Grace, Agubata N. S. (Ph.D) and Sunday David

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Abstract

This study investigated the effect ownership concentration on agency cost of industrial firms listed on the Nigerian exchange group. The specific objectives were to examine the effect of government ownership, managerial ownership, institutional ownership and foreign ownership affects agency cost of firms listed on the Nigerian exchange group. Panel Least Squared (PLS) method of data analysis was used. Secondary sources of data were employed; the interested variables were sourced from the annual report of the quoted industrial firms. The variables were assets utilization as the dependent variables while government ownership, managerial ownership, institutional ownership and block ownership were the independent variable. The study employs descriptive statistics, correlation and regression analysis in the analysis. From the analysis result the study found that. Government ownership has no significant impact on agency cost of firms listed on the Nigerian exchange group (t-test 1.539283, p=0.1286). Managerial ownership has significant impact on agency cost of firms listed on the Nigerian exchange group (t-test 4.541870, p=0.0000). Institutional ownership has significant impact on agency cost of firms listed on the Nigerian exchange group (t-test -3.443344, p=0.0005). Foreign ownership has negative and insignificant effect on agency cost of firms listed on the Nigeria exchange group (t-test -0.336863, P= 0.7372). The researcher recommends that. Government ownership of sensitive firms should be minimized, as such ownership are usually inefficient and characterized by bureaucratic bottlenecks, which do not have clear incentives to improve asset. The study recommends that financial regulatory bodies in Nigeria such as the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), and Securities and Exchange Commission (SEC) should ensure that a reasonable degree of managerial ownership is maintained by all banks due to its potential ben

keywords:

Ownership Concentration, Agency Cost, Government Ownership, Managerial Ownership, Foreign Ownership and Institutional Ownership

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References:

A.U. Sanda, Tukur Garba and A.S. Mika’ilu (2007) Do board characteristics affect firm
performance? empirical evaluation of some corporate governance mechanisms in the
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Abata, M. & Migiro, S.O (2016). Corporate governance and management of earnings:
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and Financial Innovations 13(2):189-205.

Abdelmohsen M. Desoky1 and Gehan A. Mousa (2012). Do board ownership and
characteristics affect on firm performance? Evidence from Egypt. Glo. Adv. Res. J.
Econ. Account. Finance. 1 (6) 67-87

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