The Character of Board of Director, Supervisors and Agency Cost of Charity Foundations in China

Charity foundation internal governance as a hot topic in both theory and practice are concerned. However little literature has discussed the relationship between the character of Board of Director, Supervisors and agency costs. This research studies 213 charity foundations during the period from 2011 to 2012, and tries to investigate and answer the following two questions: firstly, the impact of charity foundations' Board of director and Supervisors on agency costs. Secondly, whether charity foundations' internal governance can effectively reduce agency costs. Our conclusions include: Firstly, the bigger size of the foundation Board of Director, the more beneficial to reduce agency costs. Secondly, it's not conducive to reducing agency costs when the board of director often holds meetings and when chairman and general secretary share the dual identity. Thirdly, charity foundations' Board of Supervisors had no significant effect on reducing agency costs. The current empirical discovery helps to explain the relationship between charity foundations' board of director and board of supervisor and agency cost. The conclusions provide empirical research evidence to support some policies of supervising charity foundations' internal governance to be built.