Empirical study on board characteristics and agency costs

In order to solve the agency problems and improve the management efficiency of board of directors, this paper, selecting A-share 1399 listed companies as samples, studied the relation between board characteristics and agency costs, which was measured by total asset turnover rate and overhead expenses rate, using multiple regression analysis. This paper obtains results as follows. Board size and frequency of board meetings have a U-shaped correlation to agency costs. There is no statistically significance between proportion of independent directors and agency costs. Separation of chairman and general manager usually leads to low agency costs. The proportion of board members´ share-holding has a negative correlation with the agency costs. Finally, this paper gives three suggestions to optimize board governance, involving independent directors, incentives and constraints and rules of procedure.