Title:
Mitigating Agency Conflicts: The Role of Board Characteristics

Authors:
Nicken Destriana, Ivan Sebastian, Indonesia

Abstract:

Corporate governance stands as a cornerstone in bridging the divide between ownership and control, yet agency conflicts persistently threaten firm value. This research delves into the critical role of board characteristics in mitigating these pervasive conflicts within Indonesian manufacturing companies from 2021-2023. Utilizing a robust panel regression model with 339 observations, our findings reveal a significant relationship between gender diversity on the board of commissioners and reduced agency costs, suggesting improved information symmetry and minimized conflicts of interest. While gender diversity emerges as a key mitigator, our analysis did not find a significant relationship between agency costs and educational or age diversity across the models. This study underscores the complex and context-dependent nature of board characteristics' influence on agency costs, occasionally contradicting previous findings, particularly concerning asset utilization. By providing empirical insights into specific board attributes, this research offers invaluable guidance for companies seeking to optimize their board composition for enhanced corporate governance and ultimately, improved firm performance. It also highlights the necessity for further nuanced research considering diverse industrial contexts and additional variables such as ownership structure and audit quality.

DOI: https://doi.org/10.51505/IJEBMR.2025.9811