Corporate Governance Significantly Influences Agency Costs in Indonesian Infrastructure Companies

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FORMOSA NEWS

Naditha Ersa Auryn Alamsyah and Menik Indrati from the Faculty of Economics and Business at Esa Unggul University published a study in August 2026 examining the effect of corporate governance structures on agency costs in infrastructure sector companies on the Indonesia Stock Exchange for the 2021–2024 period. This research is important for understanding how corporate oversight can suppress unnecessary operational costs and optimize the utilization of company assets.

Agency costs arise due to potential conflicts of interest between company owners as principals and management as agents, which are often exacerbated by information asymmetry issues. In the infrastructure sector, high investment funding requirements and project complexity demand the implementation of robust corporate governance to maintain asset management efficiency.

This study employed a quantitative approach utilizing secondary data in the form of corporate annual financial reports. Using purposive sampling, 17 infrastructure companies with a total of 68 observation data points from 2021 to 2024 were selected. Data processing was carried out using panel data regression methods to analyze the relationship between variables statistically.

Based on the data analysis, this study found several key points:

• The number of board of directors was proven to have a negative and significant effect on agency costs. Adding board members strengthens internal oversight and tightens control over managers.
• The proportion of independent commissioners showed a positive effect on agency costs. This indicates the need for more optimal supervisory effectiveness from independent parties to maximize control functions.
• Institutional ownership had a positive impact on agency costs. This condition occurs because a portion of institutional ownership still maintains kinship ties that support the internal interests of the company.
• The frequency of board of directors meetings had a negative and significant effect on agency costs. Regularly planned meetings help strengthen coordination and suppress potential conflicts of interest.

According to Naditha Ersa Auryn Alamsyah and Menik Indrati from Esa Unggul University, the implementation of corporate governance mechanisms must be carried out proportionally and effectively. Infrastructure companies are advised to maintain board size to avoid inefficiencies in decision-making, as well as strengthen the role of independent and institutional oversight to achieve sustainable operational performance.

Author Profiles:

• Naditha Ersa Auryn Alamsyah (Researcher from the Faculty of Economics and Business, Esa Unggul University).
• Menik Indrati (Lecturer and researcher from the Faculty of Economics and Business, Esa Unggul University with expertise in management and economics).

Research Sources:

• Journal Article Title: The Role of Good Corporate Governance on Behavioral Opportunities
• Journal Name: Indonesian Journal of Business Analytics (IJBA), Vol. 6, No. 4 (August) 2026, pp. 1126-1145

• Official DOI: https://doi.org/10.55927/ijba.v6i4.16810