Volume 47, Issue 2, December 2025, Pages 178–188
Jules KOUNOUWEWA1
1 Assistant Professor of CAMES Universities, National School of Administration, Marketing and Organizational Governance Research Laboratory (LARMAG), University of Abomey-Calavi, Benin
Original language: English
Copyright © 2025 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
This study examines the impact of agency conflicts on the financial performance of publicly listed companies in Africa, where governance challenges, ownership concentration, and institutional frameworks vary widely across countries. Building on agency theory, the paper investigates how ownership structure, board characteristics, managerial entrenchment, and free cash flow considerations affect firm performance in emerging capital markets. Using a balanced panel of firms listed on major African stock exchanges over the period 2010–2024, the analysis employs fixed effects and dynamic system generalized method of moments (GMM) estimations to address unobserved heterogeneity and endogeneity concerns. The findings reveal that higher managerial ownership initially aligns the interests of managers and shareholders, improving firm performance, but beyond a threshold, entrenchment effects emerge and weaken returns. Board independence and audit committee effectiveness show positive associations with profitability and market valuation, while CEO duality and extended tenure negatively affect firm outcomes. Moreover, excess free cash flow is linked to overinvestment, particularly in weak governance environments, highlighting the moderating role of institutional quality and investor protection. This study contributes to the literature by providing multi-country evidence from Africa, where capital markets are under-researched yet increasingly relevant to global investors. The results have implications for policymakers, regulators, and boards of directors in strengthening corporate governance codes, enhancing investor protection, and promoting sustainable firm value creation.
Author Keywords: agency conflicts, corporate governance, managerial ownership, firm performance, Africa.
Jules KOUNOUWEWA1
1 Assistant Professor of CAMES Universities, National School of Administration, Marketing and Organizational Governance Research Laboratory (LARMAG), University of Abomey-Calavi, Benin
Original language: English
Copyright © 2025 ISSR Journals. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract
This study examines the impact of agency conflicts on the financial performance of publicly listed companies in Africa, where governance challenges, ownership concentration, and institutional frameworks vary widely across countries. Building on agency theory, the paper investigates how ownership structure, board characteristics, managerial entrenchment, and free cash flow considerations affect firm performance in emerging capital markets. Using a balanced panel of firms listed on major African stock exchanges over the period 2010–2024, the analysis employs fixed effects and dynamic system generalized method of moments (GMM) estimations to address unobserved heterogeneity and endogeneity concerns. The findings reveal that higher managerial ownership initially aligns the interests of managers and shareholders, improving firm performance, but beyond a threshold, entrenchment effects emerge and weaken returns. Board independence and audit committee effectiveness show positive associations with profitability and market valuation, while CEO duality and extended tenure negatively affect firm outcomes. Moreover, excess free cash flow is linked to overinvestment, particularly in weak governance environments, highlighting the moderating role of institutional quality and investor protection. This study contributes to the literature by providing multi-country evidence from Africa, where capital markets are under-researched yet increasingly relevant to global investors. The results have implications for policymakers, regulators, and boards of directors in strengthening corporate governance codes, enhancing investor protection, and promoting sustainable firm value creation.
Author Keywords: agency conflicts, corporate governance, managerial ownership, firm performance, Africa.
How to Cite this Article
Jules KOUNOUWEWA, “Impact of Agency Conflicts on Financial Performance: Evidence from Publicly Listed Companies in Africa,” International Journal of Innovation and Applied Studies, vol. 47, no. 2, pp. 178–188, December 2025.
