Rookie independent directors and agency costs: Evidence from Chinese listed firms
Waqas Bin Khidmat,
Nadia Ashraf,
Sook Fern Yeo,
Cheng Ling Tan,
Muhammad Noman Shafique
Affiliations
Waqas Bin Khidmat
Department of Business Administration, Air University Islamabad, Aerospace and Aviation Campus, Kamra, Attock, Pakistan; Faculty of Business, Multimedia University, Malaysia
Nadia Ashraf
Department of Business Administration, Air University Islamabad, Aerospace and Aviation Campus, Kamra, Attock, Pakistan
Sook Fern Yeo
Faculty of Business, Multimedia University, Malaysia; Department of Business Administration, Daffodil International University, Dhaka, Bangladesh; Corresponding author. Faculty of Business, Multimedia University, Malaysia.
Cheng Ling Tan
Graduate School of Business, Universiti Sains Malaysia, Malaysia; Department of Information Technology and Management, Daffodil International University, Dhaka, Bangladesh
Muhammad Noman Shafique
Faculty of Business, Multimedia University, Malaysia; CESAM—Centre for Environmental and Marine Studies, Department of Environment and Planning, University of Aveiro, 3810-193 Aveiro, Portugal
This study investigates the impact of rookie independent directors (RIDs) on agency costs. Utilizing a sample of Chinese listed firms, we employ panel ordinary least square estimations. Our findings reveal that increased RIDs is positively associated with agency costs, suggesting that rookie independent directors may exacerbate agency conflicts within Chinese firms. Also, qualified financial institutional investors and gender diversity within the board composition mitigate the positive effect of RIDs on agency costs. Overall, our study contributes to understanding corporate governance dynamics in Chinese listed firms by shedding light on the nuanced relationship between rookie independent directors and agency costs.
