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Blockholding and agency cost: evidence from Nigeria

Ibe Ibekwe (Business School, University of St. Thomas Mozambique, Maputo, Mozambique)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 7 June 2021

Issue publication date: 16 May 2023




The study examines how blockholding, blockholding nationality and multiple blockholder structures (MBS) are related to agency cost in Nigeria.


Data sourced from the annual reports of 84 non-financial services firms listed on the Nigerian Stock Exchange (NSE) from January 1, 2008, to December 31, 2015, were analyzed using the hybrid model in Stata 15.


Blockholding showed a significant negative relationship with the expense ratio (ER) measure of agency cost at the between-firm level but not significantly related to asset utilization ratio (AUR). This result was driven more by foreign blockholding and concentration of control, which were negatively and significantly related to the ER. Concentration of control is negatively related to the AUR. Domestic blockholding and the number of blockholders were not significantly related to agency cost. Foreign-blockholder-firms had a significantly greater concentration of control (lesser contest for control) than domestic-blockholder-firms.

Practical implications

The findings suggest that foreign blockholding would be more effective in controlling agency costs in Nigeria. While the concentration of control (lesser contest for control) appears to be an efficient governance mechanism for reducing agency costs associated with expenses in Nigeria, it seems to exacerbate agency costs associated with asset utilization.


Previous researchers have not studied how foreign and domestic blockholding are related to agency cost. They also have not studied how MBS and the contest for control are related to agency cost and explain differences in the foreign/domestic blockholding-agency cost relationships in the Nigerian context.



The author grateful to the editors and anonymous reviewers of this paper. They provided useful insights and suggestions that helped the author to improve the paper.


Ibekwe, I. (2023), "Blockholding and agency cost: evidence from Nigeria", International Journal of Emerging Markets, Vol. 18 No. 5, pp. 1078-1101.



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