Managerial Ownership, Horizontal Agency Costs and Monitoring Mechanisms

Company operations are characterized by information asymmetry between the agent (management and the board of directors) and the principal (shareholders). The purpose of this study is to empirically examine the extent of monitoring mechanisms in Nigerian non-financial listed companies and the impact of managerial ownership and horizontal-agency-costs on the mechanisms. The study adopted a quantitative approach and distributed 332 questionnaires to 166 non-financial listed companies to obtain a cross-sectional data for the internal auditing. The findings give credible evidence that the horizontal-agency-cost is positively significant while managerial ownership is negatively significant. The findings of this study suggest policy implications for the monitoring roles of the board of directors as well as the internal and external auditors. Likewise, the findings are useful to the regulatory agencies and government for a further review of corporate governance guidelines. This paper contributes to knowledge by combining the three dimensions of monitoring mechanisms (directorship, internal and external auditing) in Sub-Saharan Africa. (C) 2016 Published by Future Academy www.FutureAcademy.org.uk