The Influence of Corporate Governance on Agency Costs in Context Omanian Market

Abstract

This research aims to examine the impact of corporate governance (board of director’s characteristics and ownership structure) on the agency costs-as-sets utilization ratio, operating expense to sale ratio using a sample of Oma-nia firms for the period 2009–2015. The paper employed regression method to test study hypotheses. The findings show that board size has significant negative impact on the assets utilization ratio but has positive and significant impact on the operating expense to sale ratio, also independence of board has positive and significant effect on both assets utilization ratio, operating expense to sale ratio. While, multiple directorship has no effect impact on the assets utilization, but has positive and significant impact on the operating expense to sale ratio. In terms of ownership structure attributes, the results indicate that institutional investors and state ownership have significant negative effect with both assets utilization ratio and operating expense. Whereas, ownership concentration has positive and significant relation with both assets utilization ratio and operating expense to sale ratio. Also this paper uses control variables such as leverage ratio, dividend payout ratio and firm size. The findings show that dividend policy and debt ratio are reducing agency cost, whereas, company size has no impact on the agency costs.