scholarly journals Corporate Governance and Capital Structure: Evidence from Sustainable Institutional Ownership

2020 ◽  
Vol 12 (10) ◽  
pp. 4190
Author(s):  
Paul Moon Sub Choi ◽  
Joung Hwa Choi ◽  
Chune Young Chung ◽  
Yun Joo An
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Corporate Sustainability ◽  
Generalized Method Of Moments ◽  
Institutional Ownership ◽  
Debt Level ◽  
Variable Approach ◽  
Long Run ◽  
Institutional Monitoring ◽  
Institutional Owners

Because corporate sustainability enhances corporate governance principles, firms are increasing their efforts to provide transparency and public disclosure. These efforts inform the public about the relationship between corporate governance and sustainability. Well-informed shareholders know about this relationship, which is becoming more apparent over time. In this study, we empirically examined the possible bilateral relationships between institutional ownership and a firm’s capital structure. Methodologically, we used an instrumental variable approach and the two-step generalized method of moments. The implications of this study are two-fold. First, we found that a firm’s debt level was low if its institutional ownership level was high. Institutional monitoring may substitute for external debt monitoring, leading firms to employ low leverage. Second, we found that the level of institutional ownership was high if a firm’s debt level was high. This association suggests that institutional investors prefer high-leveraged firms because institutional owners decrease their monitoring costs through debt monitoring. In the long run, sustainable institutional ownership materially impacts the capital structures of firms.

Corporate governance practices and capital structure decisions: the moderating effect of gender diversity

2020 ◽  
Vol 20 (5) ◽  
pp. 939-964
Author(s):  
Mohammad A.A Zaid ◽  
Man Wang ◽  
Sara T.F. Abuhijleh ◽  
Ayman Issa ◽  
Mohammed W.A. Saleh ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Capital Structure ◽  
Generalized Method Of Moments ◽  
Gender Diversity ◽  
Business Environment ◽  
Board Structure ◽  
Content Type ◽  
Financing Decisions ◽  
The Impact

Purpose Motivated by the agency theory, this study aims to empirically examine the nexus between board attributes and a firm’s financing decisions of non-financial listed firms in Palestine and how the previous relationship is moderated and shaped by the level of gender diversity. Design/methodology/approach Multiple regression analysis on a panel data was used. Further, we applied three different approaches of static panel data “pooled OLS, fixed effect and random effect.” Fixed-effects estimator was selected as the optimal and most appropriate model. In addition, to control for the potential endogeneity problem and to profoundly analyze the study data, the authors perform the one-step system generalized method of moments (GMM) estimator. Dynamic panel GMM specification was superior in generating robust findings. Findings The findings clearly unveil that all explanatory variables in the study model have a significant influence on the firm’s financing decisions. Moreover, the results report that the impact of board size and board independence are more positive under conditions of a high level of gender diversity, whereas the influence of CEO duality on the firm’s leverage level turned from negative to positive. In a nutshell, gender diversity moderates the effect of board structure on a firm’s financing decisions. Research limitations/implications This study was restricted to one institutional context (Palestine); therefore, the results reflect the attributes of the Palestinian business environment. In this vein, it is possible to generate different findings in other countries, particularly in developed markets. Practical implications The findings of this study can draw responsible parties and policymakers’ attention in developing countries to introduce and contextualize new mechanisms that can lead to better monitoring process and help firms in attracting better resources and establishing an optimal capital structure. For instance, entities should mandate a minimum quota for the proportion of women incorporation in boardrooms. Originality/value This study provides empirical evidence on the moderating role of gender diversity on the effect of board structure on firm’s financing decisions, something that was predominantly neglected by the earlier studies and has not yet examined by ancestors. Thereby, to protrude nuanced understanding of this novel and unprecedented idea, this study thoroughly bridges this research gap and contributes practically and theoretically to the existing corporate governance–capital structure literature.

scholarly journals PENGARUH PENERAPAN GOOD CORPORATE GOVERNANCE TERHADAP STRUKTUR MODAL PERUSAHAAN GO PUBLIC YANG TERCATAT DI BURSA EFEK INDONESIA

2013 ◽  
Vol 4 (1) ◽  
Author(s):  
ERIKA SEPTIANTY
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Executive Directors ◽  
Control Variables ◽  
Good Corporate Governance ◽  
Equity Ratio ◽  
A Company

<p>Good Corporate Governance (GCG) is increasingly popular. but has a very important meaning in the system of corporate governance and managerial aspects, and investing in a good organization profit organization and this research uses its capital structure as measured by the debt-equity ratio as the dependent variable, while institutional ownership and managerial ownership as well as company size and profitability as the independent variable and three control variables. Control variables are variables that are controlled or held constant so that the effect o outside factors.  Control variables used in the study include the Board of Directors, non-executive directors, and chair duality. Research is underway to find empirical evidence of the influence of the implementation of Good Corporate governanve the company's capital structure. The population used in this study is a company listed on the Indonesia Stock Exchange, while the sample is a company in the implementation of corporate governance ranking by IICG during the period 2005-2011. From the results of testing the hypothesis, suggesting that the effect of corporate governance is proxied by managerial ownership, institutional ownership and firm size has no influence not have any impact on capital structure. The research proves that the variables have an influence on the profitability of capital structure. In general, the results of this study indicate that companies listed on the Stock Exchange has not fully considering the use of corporate governance in determining capital structure.</p> <p>Keyword:        Managerial Ownership, Institutional Ownership, Profitability, Firm Size, Good Corporate Governance, Capital Structure.</p> <p> </p> <p><strong> </strong></p> <p><strong>ABSTRAK</strong></p> <p><em>Good Corporate Governance </em>(GCG) semakin populer. namun mempunyai arti yang sangat penting dalam sistem tata kelola perusahaan maupun dalam aspek manajerial dan investasi dalam suatu organisasi baik organisasi laba dan nonlaba.Penelitian ini menggunakan struktur modal yang diukur dengan <em>debt-equity ratio</em> sebagai variabel dependen, sedangkan kepemilikan institusional dan kepemilikan manajerial, serta ukuran perusahaan dan profitabilitas sebagai variabel independen dan tiga variabel kontrol.  Variabel kontrol merupakan variabel yang dikendalikan atau dibuat konstan sehingga pengaruh variabel independen terhadap variabel dependen tidak dipengaruhi oleh faktor luar yang tidak diteliti.  Variabel kontrol yang digunakan dalam penelitian antara lain Dewan Direksi, <em>non-executive directors</em>, dan<em> chair duality</em>. Penelitian ini dilakukan untuk menemukan bukti empris adanya pengaruh penerapan <em>Good Corporate governanve</em> terhadap struktur modal perusahaan. Populasi yang digunakan dalam penelitian ini adalah perusahaan yang terdaftar di Bursa Efek Indonesia, sedangkan sampel adalah perusahaan yang masuk dalam pemeringkatan penerapan <em>corporate governance </em>yang dilakukan oleh IICG selama periode 2005-2011. Dari hasil pengujian hipotesis, menunjukkan bahwa pengaruh <em>corporate governance</em> yang diproksikan oleh kepemilikan manajerial, kepemilikan institusional dan ukuran perusahaan tidak mempunyai pengaruh terhadap struktur modal.  Hasil penelitian membuktikan bahwa variabel profitabilitas mempunyai pengaruh terhadap struktur modal.Secara umum hasil penelitian ini menunjukkan bahwa perusahaan yang terdaftar di BEI belum sepenuhnya memperhatikan penggunaan corporate governance dalam menentukan kebijakan struktur modalnya,</p> <p>kata kunci: <em>good corporate governanve</em>, kepemilikan manajerial, kepemilikan institusional, profitabilitas, ukuran perusahaan, struktur modal</p>

scholarly journals Ownership Structure, Corporate Governance and Capital Structure of Non-Financial Firms of Pakistan

2018 ◽  
Vol 10 (1) ◽  
pp. 31-46
Author(s):  
Hassan Ahmad ◽  
Nasreen Akhter ◽  
Tariq Siddiq ◽  
Zahid Iqbal
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Ownership Structure ◽  
Negative Impact ◽  
Institutional Ownership ◽  
Board Independence ◽  
Managerial Ownership ◽  
Debt Ratio ◽  
Significant Negative Impact ◽  
The Impact

This study is undertaken with the purpose of investigating the impact of ownership structure and corporate governance on the capital structure of Pakistani listed firms from 2011-2014, feasible general least square is used to investigate the impact of ownership structure and corporate governance on capital structure of KSE 100 index firms. Explanatory variables include ownership concentration, managerial ownership, foreign ownership, institutional ownership, board size, board independence and CEO duality along with the three control variables namely firm size, firm profitability and liquidity. There is insignificant positive relationship between ownership concentration and capital structure, managerial ownership has a significant negative impact on debt ratio. Foreign ownership has also a significant negative impact on firm capital structure and institutional ownership has significant positive impact on capital structure. Board size is positively related to capital structure, board independence also positively related to firm’s debt ratio but CEO duality negatively related to the dependent variable, all these variables have significant impact on capital structure of Pakistani firms. 

scholarly journals STRUKTUR MODAL, GOOD CORPORATE GOVERNANCE DAN KUALITAS LABA

2016 ◽  
Vol 2 (2) ◽  
pp. 184-198
Author(s):  
Nadirsyah Nadirsyah ◽  
Fadlan Nur Muharram
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Institutional Ownership ◽  
Capital Adequacy ◽  
Audit Committees ◽  
Managerial Ownership ◽  
Good Corporate Governance ◽  
Capital Adequacy Ratio

AbstractThe objective of the study was to examine the effect of capital structure and good corporate governance (GCG) on the earnings quality. The GCG variable are proxied by audit committees, independent commissioners, managerial ownership, and institutional ownership. The earnings quality measured by using Capital Adequacy Ratio (CAR) indicator with Earning Response Coeficient (ERC). The data was collected from the financial statements of the manufacture companies that listed at Indonesia Stock Exchange in the period between 2009 and 2013. By using purposive sampling and balanced panel data, there are 22 companies were selected as the sample. Multiple linier regression model is used to test the hypothesis The results of this study are capital structure, independent commissioners, audit committees, managerial ownership, and institutional ownership affected on the earnings quality simultaneously. Capital structure partially affected on the earnings quality. The audit committees, independent commissioners, managerial ownership, and institutional ownership affected on the earnings quality partially have an effect on the earnings quality. Keywords: capital structure, good corporate governance, earnings quality, ERC

scholarly journals Pengaruh Corporate Governance Terhadap Struktur Modal Pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Tahun 2014-2017

Jurnal Ecogen ◽  
2019 ◽  
Vol 2 (4) ◽  
pp. 778
Author(s):  
Rahmi Aulia Putri ◽  
Yolandafitri Zulvia
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Audit Committee ◽  
Stock Exchange ◽  
Sample Selection ◽  
Secondary Data ◽  
Institutional Ownership ◽  
Manufacturing Companies ◽  
Agency Conflict ◽  
Equity Ratio

This study aims to examine the effect of corporate governance on the capital structure of manufacturing companies listed on the Indonesia Stock Exchange. Companies need an optimal capital structure so that there are no problems that will later impact the risk of high corporate bankruptcy. Capital structure will be optimal if there is no agency problem. Agency problems occur because of differences in interests between managers, investors, and creditors. To reduce agency conflict, corporate governance is needed. Institutional ownership and the size of the audit committee are used in this study as part of corporate governance. Debt to equity ratio was used to measure capital structure in this study. The sample used in this study amounted to 76 manufacturing companies listed on the Indonesia Stock Exchange. The sample selection in this study used a purposive sampling method. The type of data used is secondary data obtained from www.idx.co.id. The analytical method used is multiple regression analysis. The results of the study show that institutional ownership has a significant effect on capital structure, while the audit committee has no significant effect on capital structure. Keywords: capital structure, corporate governance, institusional ownership, audit committee

Impact of corporate governance on capital structure: mediating role of cost of capital

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aisha Javaid ◽  
Mian Sajid Nazir ◽  
Kaneez Fatima
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Content Type ◽  
Mediating Role ◽  
The Relationship

PurposeThis paper contributes to the existing literature by extending the empirical work on the relationship between corporate governance and capital structure by analyzing the mediating role of cost of capital in the non-financial firms listed on the Pakistan Stock Exchange (PSX).Design/methodology/approachThe sample for this study includes non-financial firms listed on the Pakistan Stock Exchange (formerly Karachi Stock Exchange) for the period of 2004–2016. Based on 1800 firm-year observations, three approaches of panel data analysis are applied for the step-wise analysis of the underlying study. Firstly, Pooled OLS is applied. Secondly, fixed and random effect panel regression followed by the Hausman test to check the unobservable individual heterogeneity of the data. Hausman test indicates that the fixed-effects model is the most appropriate model for the sample panel data.FindingsThe study's findings are that board size, board composition, CEO/Chair duality, institutional ownership and managerial ownership have statistically significant direct effect on the firm's financing decisions. However, CEO/Chair duality, institutional ownership and managerial ownership have significant indirect effect on firm's capital structure decisions. The interesting finding of the paper is on the evidence of mediating role of cost of capital in the nexus of corporate governance and capital structure. Moreover, some conventional determinants of capital structure, including the firm's size, asset structure of the firm, profitability, business risk and growth, are found as determinants of capital structure decisions of the firms.Research limitations/implicationsThere are a few limitations to our study which could be addressed by upcoming research. We did not include all the four mechanisms of corporate governance including board structure, audit structure, compensation structure and ownership structure. However, we used only five important attributes including board size, board composition and CEO/Chair duality form board structure, managerial ownership and institutional ownership form ownership structure of corporate governance as our explanatory variables to examine their impact on the capital structure choices of the firms. Future studies may fill this research gap by involving some other attributes of corporate governance and analyzing their effectiveness and impact on value relevant capital structure decisions. Further, due to limited time and resources, we only tested the mediating role of cost of capital, hence, future researchers can analyze the mediating and moderating roles of different variables which may influence the relationship between corporate governance and capital structure choices of the firms.Practical implicationsThe study has many valuable guidelines and practical implications for the financial managers of the corporations. Our results will facilitate the policymakers in setting their corporate governance policies and practices and making the value relevant capital structure decisions in compliance with the implications of corporate governance mechanism. In addition, our study provides the empirical evidence in accordance with the argument that good governance practices, particularly the voluntary disclosures by the firm may reduce the information asymmetry which, ultimately, reduces the agency cost and the cost of capital for the firm. However, while deciding the financial policy of the corporations, managers can use our findings in order to assess the effectiveness of corporate governance practices employed by the firm in achieving the optimal capital structure at which the weighted average cost of capital is at its minimum level.Originality/valueThis paper contributes to the literature by investigating the mediating role of the cost of capital in the relationship between corporate governance and capital structure decisions of the firms. This paper provides empirical evidence that corporate governance indirectly affects capital structure decisions through the mediating role of cost of capital.

scholarly journals Role of Foreign and Domestic Institutional Investors in Corporate Sustainability: Focusing on R&D Investment

2020 ◽  
Vol 12 (20) ◽  
pp. 8754 ◽  
Author(s):  
Ilhang Shin ◽  
Sorah Park
Keyword(s):  
Institutional Investors ◽  
Corporate Sustainability ◽  
Institutional Ownership ◽  
Ordinary Least Squares ◽  
Sustainable Growth ◽  
Least Squares Regression ◽  
Variable Approach ◽  
Managerial Myopia ◽  
D Investment

This paper examines the effects of ownership by foreign and domestic institutional investors on corporate sustainability by focusing on the level of research and development (R&D) investment. Long-term investment in R&D is crucial for companies that seek to generate sustainable growth. Ordinary least-squares regression is performed on a sample of Korean listed companies. The main test with both foreign and domestic institutional ownership is based on a study period from 2001 to 2004. The results indicate that firms with higher levels of foreign institutional ownership exhibit greater levels of corporate R&D activities, while the ownership by domestic institutions has no significant influence on firms’ R&D investment. An additional test with foreign institutional ownership data is based on an extended study period from 2001 to 2014, and shows that foreign institutional ownership is positively related to firms’ R&D investment. This result survives the two-stage instrumental variable approach used to address endogeneity factors in foreign institutional ownership. Taken together, these findings suggest that foreign institutions can effectively monitor managerial myopia and promote corporate innovations.

scholarly journals The Effect of Corporate Governance on Earnings Management with Capital Structure as Intervening Variable

2020 ◽  
Vol 1 (2) ◽  
pp. 090-106
Author(s):  
Nur Meida Audina
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Earnings Management ◽  
Financial Services ◽  
Commercial Banks ◽  
Quantitative Research ◽  
Audit Committee ◽  
Secondary Data ◽  
Institutional Ownership ◽  
Managerial Ownership

The purpose of this study is to determine the effect of corporate governance on earnings management with capital structure as an intervening variable in Islamic commercial banks registered in the Financial Services Authority (OJK) for the 2014-2018 period. This research uses quantitative research by using multiple linear regression and path analysis as data analysis. This study uses secondary data in the form of panel data on Islamic commercial banks registered with the Financial Services Authority (OJK) for the 2014-2018 period. The data that has been obtained is then analyzed using SPSS 23 devices. The population in this study are all Islamic commercial banks registered at the Financial Services Authority (OJK) during the 2014-2018 period. The sampling method is done by purposive sampling that is by using several criteria to obtain 12 Islamic banks that are used as research samples. The results of this study indicate that managerial ownership, institutional ownership and audit committee have no effect on earnings management. Managerial ownership, institutional ownership, and audit committee do not affect the capital structure. Capital structure cannot mediate the relationship between managerial ownership, institutional ownership and earnings management.

Analyst Coverage and Corporate Governance of French IPOs

2018 ◽  
Vol 5 (1) ◽  
pp. 22-36
Author(s):  
Benedicte Millet-Reyes
Keyword(s):  
Corporate Governance ◽  
Private Information ◽  
Positive Association ◽  
Institutional Ownership ◽  
Analyst Coverage ◽  
Foreign Investors ◽  
Good Corporate Governance ◽  
Governance Practices ◽  
Institutional Owners ◽  
The Impact

Analyst coverage has been associated with good corporate governance characteristics, especially in countries with weak investor protection. This hypothesis is tested for a sample of French IPOs covering the period 2004-2015. In theory, analysts can provide useful forecasts and recommendations for newly listed companies with a potential for asymmetric information. However, weak corporate governance practices may lead to their reluctance to provide coverage. Logistic regression results clearly indicate that financial analysts are more likely to follow IPOs with large institutional owners. However, this positive association disappears when French institutional shareholdings are combined with two-tier board structures and high debt levels, suggesting that analysts acknowledge the increased potential for inside monitoring and private information channels in these firms. In contrast, the impact of debt becomes positive when combined with foreign institutional ownership, indicating that analysts welcome foreign investors as promoters of good corporate governance practices.

scholarly journals Does Sustainable Corporate Governance Enhance Accounting Practice? Evidence from the Korean Market

2020 ◽  
Vol 12 (7) ◽  
pp. 2585 ◽  
Author(s):  
Daeheon Choi ◽  
Paul Moon Sub Choi ◽  
Joung Hwa Choi ◽  
Chune Young Chung
Keyword(s):  
Corporate Governance ◽  
Value Relevance ◽  
Earnings Quality ◽  
Corporate Sustainability ◽  
Earnings Persistence ◽  
Governance Mechanism ◽  
Institutional Monitoring ◽  
Korean Market ◽  
The Impact ◽  
The Relationship

As corporate sustainability continues to improve and enhance the principles of good corporate governance, firms are exerting increasing efforts in terms of transparency and public disclosure. Transparency efforts provide information to the general public on the relationship between corporate governance and improved sustainability. The better informed shareholders are about the connection between corporate governance and sustainability, the more apparent the relationship will become over time. Prior studies assume that blockholders engage in active institutional monitoring by intervening directly in firms’ operations. In contrast, we argue that passive institutional monitoring is a more feasible governance mechanism in the Korean market owing to the market’s unique features (i.e., chaebols and pressure sensitivity). In particular, focusing on the blockholdings of the Korean National Pension Service (KNPS), we study the impact of passive monitoring on firms’ earnings quality, represented by earnings persistence, value relevance, and timeliness. The empirical evidence shows that KNPS blockholdings have a positive and significant impact on corporate earnings quality, indicating that passive blockholder monitoring is a more efficient channel for improving earnings quality in South Korea. Our results may be generalized to other emerging markets in which a few entities with concentrated economic power engender pressure-sensitive corporate landscapes for sustainability.

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