Cross-Country Analysis of Corporate Governance Mechanisms and Agency Costs: Evidence from OECD and Emerging Economies Before and After COVID-19

Abstract

This study investigates the role of corporate governance mechanisms in mitigating agency costs across both OECD and emerging economies, with a comparative lens on the pre- and post-COVID-19 periods. Building upon prior research that primarily focused on ownership concentration and audit committee independence in single-country contexts, this paper expands the analytical framework to include a broader range of governance variables such as board diversity, executive compensation, CEO duality, and dividend policy. Using panel data from listed firms across six countries between 2010 and 2022, the study incorporates both forward-looking (Tobin's Q and free cash flow interaction) and backward-looking (expense ratio and asset utilization) proxies for agency costs. Regression analysis reveals that internal governance structures exhibit varying degrees of effectiveness, depending on institutional settings, firm type (financial versus non-financial), and economic phase (pre-COVID-19 versus post-COVID-19). Notably, the pandemic intensified the importance of independent board oversight and incentive-aligned compensation structures. The findings offer valuable insights for policymakers, investors, and corporate managers in designing resilient governance frameworks that are tailored to the evolving risks associated with agency in various economic environments.