scholarly journals Board monitoring and capital structure dynamics: evidence from bank-based economies

2021 ◽  
Author(s):  
Ernest Ezeani ◽  
Rami Salem ◽  
Frank Kwabi ◽  
Khalid Boutaine ◽  
Bilal ◽  
...  
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Speed Of Adjustment ◽  
Board Characteristics ◽  
Structure Dynamics ◽  
Governance Environment ◽  
Board Monitoring ◽  
The Impact ◽  
Oriented System ◽  
The Capital Structure

AbstractWe examine the impact of board characteristics on the speed of adjustment and the capital structure dynamics of firms in bank-based economies. Using 3927 firm-year observations over a 10-year (2009–2019), we find that board characteristic influences firms' speed of adjustment in a bank-based (stakeholder-oriented) system. We also find some evidence that board characteristics have varying impacts on the capital structure of Japanese, French and German firms. We conclude that firms' capital structure reflects the corporate governance environment they operate. Our results are robust to accounting for endogeneity and alternative leverage measure.

scholarly journals Determinants of Capital Structure within the Context of Corporate Governance in Egypt

2018 ◽  
Vol 13 (8) ◽  
pp. 26 ◽  
Author(s):  
Hanaa A. El-Habashy
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Emerging Economy ◽  
Managerial Ownership ◽  
Listed Firms ◽  
Western Countries ◽  
Specific Factors ◽  
The Impact ◽  
The Capital Structure

This study aims to investigate the characteristics of corporate governance that impact the capital structure decisions in listed firms in Egypt, to test the efficiency of the research results conducted in the developed Western countries in an emerging economy. A sample of 240 observations from the most active non-financial companies collected in the period 2009-2014 was used for hypothesis testing. Multiple regression models (OLS) were used for data analysis. Seven variables are used in measuring the attributes of corporate governance; they are the managerial ownership, institutional shareholding, shares owned by a large block, board size, board composition, separation of CEO/Chair positions and audit type. Four ratios were calculated for measuring the capital structure, they are long-term and short-term debt to assets, total debt to assets and debt to equity. The results suggest that corporate governance attributes have a significant impact on the capital structure decisions of listed Egyptian companies. In addition, firm-specific factors such as profitability, tangibility, growth opportunities, corporate tax, firm size and non-debt tax shields influence the choice of capital structure in Egypt. The results showed the same relationship with what was obtained in developed Western countries. The paper offers some contribution in the literature and helps to understand the impact of corporate governance on Egypt's capital structure as an emerging economy.

scholarly journals Capital structure and corporate governance: the French case

2008 ◽  
Vol 5 (2) ◽  
pp. 427-433
Author(s):  
Esther Jeffers ◽  
Dominique Plihon
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Financial Markets ◽  
World Economy ◽  
Corporate Strategies ◽  
Financial Innovations ◽  
The World ◽  
French Case ◽  
The Impact ◽  
The Capital Structure

The world economy has undergone major changes during the last twenty years. Financial markets have grown spectacularly on the international level. In particular, stock markets rose substantially in the 1990s. At the same time, the combined process of deregulation and financial innovations transformed the internationalization of financial activities into financial globalization, which witnessed a considerable strengthening of both the impact and freedom of action of the main players. France did not remain unaffected by this evolution, much the contrary. This was all the more impressive given the historical weakness of the country’s financial markets. Many studies have been devoted to the growth of financial markets and many others to corporate governance, but the influence of the capital structure and the forms of governance on corporate strategies have rarely been empirically evaluated in the literature, due to the scarcity of relevant data. This paper aims at understanding (I) how the capital structure of French corporations has changed and, through an empirical study, (II) how this change may have impacted their strategy

scholarly journals Does board characteristics affect the capital structure decisions of Ghanaian SMEs?

2006 ◽  
Vol 4 (1) ◽  
pp. 113-118 ◽  
Author(s):  
Joshua Abor ◽  
Nicholas Biekpe
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Small And Medium Enterprises ◽  
Governance Structures ◽  
Outside Directors ◽  
Corporate Board ◽  
Board Size ◽  
Board Characteristics ◽  
Financing Decisions ◽  
The Capital Structure

The issue of corporate governance has been a growing area of management research especially among large and listed firms. However, less attention has been paid in the area with respect to Small and Medium Enterprises (SMEs). This current study explores the link between corporate board characteristics the capital structure decision of SMEs. The paper specifically assesses how the adoption of corporate governance structures among Ghanaian SMEs influences their financing decisions by examining the relationship between corporate governance characteristics and capital structure using an appropriate regression model. The results show negative association between capital structure and board size. Positive relationships between capital structure and board composition, board skills, and CEO duality are, however, found. The control variables in the model show signs which are consistent with standard capital structure theories. The results generally suggest that SMEs pursue lower debt policy with larger board size. Interestingly, SMEs with higher percentage of outside directors, highly qualified board members and one-tier board system rather employ more debt. It is clear, from the study, that corporate governance structures influence the financing decisions of Ghanaian SMEs.

scholarly journals Bank Capital Structure Dynamics and Covid-19: Evidence from South Asia

2021 ◽  
Vol 3 (3) ◽  
Author(s):  
Khalil Ullah Mohammad ◽  
Mohsin Raza Khan
Keyword(s):  
Capital Structure ◽  
South Asia ◽  
South Asian ◽  
Economic Activity ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Bank Capital ◽  
Structure Dynamics ◽  
The Impact ◽  
The Capital Structure

The severity in terms of economic activity of the Covid-19 crisis was higher than the global financial crisis. Covid-19 has not only challenged the economic activity across the world but has put to test how the bank operates under the global crises. The objective of this paper is to identify the impact of the Covid-19 crisis on the South Asian banking sector. We investigate if South Asian banks have target leverage and how the Covid-19 crisis impacted their capital structure dynamics. To fulfill the objective, past data on all banks of South Asian countries listed in the Thomson Reuter Refinitiv were considered. The sample ended up including quarterly data of banks from India, Pakistan, Bangladesh, Sri Lanka, Bhutan Nepal and Afghanistan. Engle-Granger's two-step procedure for error correction and two-step GMM estimation was employed to measure the speed of adjustment and the impact of Covid-19 on bank capital. The study found that the capital structure determinants favor the static trade-off theory for South Asian banks. It is also observed that South Asian banks’ capital was negatively impacted by Covid-19. The analysis supports the view of leverage convergence for the capital structure. This study improves our understanding of the capital structure dynamics of banks in response to exogenous shocks in South Asia.

Capital structure and corporate governance of soccer clubs

2014 ◽  
Vol 37 (7) ◽  
pp. 658-678 ◽  
Author(s):  
Panagiotis Dimitropoulos
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Content Type ◽  
Financing Decisions ◽  
Corporate Governance Mechanisms ◽  
Football Clubs ◽  
Future Viability ◽  
Corporate Governance Quality ◽  
The Impact ◽  
The Capital Structure

Purpose – The present study aims to examine the impact of corporate governance quality on the capital structure of European soccer clubs and specifically on the level of debt that soccer clubs decide to issue. Design/methodology/approach – A sample from 67 European soccer clubs over the period of 2005-2009 was analyzed, and panel data techniques were performed to assess the impact of specific corporate governance provisions on the capital structure of football clubs (FCs). Findings – Evidence indicate that efficient corporate governance mechanisms such as the increased board size and independence and the existence of more dispersed ownership (managerial and institutional) result in a reduction in the level of leverage and debt, thus reducing the risk of financial instability. Practical implications – This evidence suggests that corporate governance could be used as a monitoring mechanism for reducing the fictitious level of debt that characterizes the majority of European soccer clubs. This study could prove useful to Union of European Football Associations (UEFA) regulators because it provides an additional insight for the importance of establishing sound governance principles in European soccer so as to enhance the effectiveness of the recent “financial fair play” regulation which was launched in 2010, as well as to improve the financial status of the clubs and sustain their future viability. Originality/value – This is the first study internationally that examines capital structure within FCs, thus extending the existent empirical evidence in the literature and adding to a growing body of research on the issues of corporate governance and financing decisions.

Is the Concept of Corporate Governance a Strategic Plan for Firms’ Optimum Capital Structure? Evidence from Manufacturing Companies

2020 ◽  
Vol 3 (2) ◽  
pp. 113-131
Author(s):  
Chandrika Prasad Das ◽  
Himanshu Agarwall ◽  
Rabindra Kumar Swain
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Audit Committee ◽  
Strategic Plan ◽  
Independent Director ◽  
Manufacturing Companies ◽  
Equity Ratio ◽  
The Impact ◽  
The Relationship ◽  
The Capital Structure

The aim of the article is to examine the relationship as well as measure the impact of corporate governance as a strategic plan on capital structure decision of top Bombay Stock Exchange-listed manufacturing firms in India. Panel regression analysis is employed to estimate the relationship and measure the impact of corporate governance, namely, size, meetings, independent director, women director and audit committee meetings, on the capital structure mix (debt–equity ratio) of the sample corporate, during a 10-year period of 2008–2017. The results of study reveal that the components of corporate governance, namely, size, board meetings, independent director, and audit committee meetings have a positive association with the capital structure variable (debt–equity ratio) of the sample manufacturing companies. However, there is a negative relationship between the control variables (ROCE and NWTA) and the dependent variable of the sample corporate. Overall, as per the study results, a statistically significant impact prevails on the capital structure, of corporate governance variables, taken as a whole. This article adds on to the existing study by highlighting a new prospect of relation and influence of corporate governance on capital structure decisions. The statistical findings of the study provide evidence to the corporate sector in deciding the optimum capital structure, affecting its costs and performance, and to the regulatory authorities in framing and implementing corporate governance mechanisms more effectively and efficiently for improving the economy of the country.

scholarly journals The Impact of Corporate Governance on the Capital Structure of Companies from the Energy Industry. The Case of Poland

Energies ◽  
2021 ◽  
Vol 14 (21) ◽  
pp. 7412
Author(s):  
Barbara Grabinska ◽  
Marcin Kedzior ◽  
Dorota Kedzior ◽  
Konrad Grabinski
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Climate Policy ◽  
Personal Characteristics ◽  
Energy Sector ◽  
State Ownership ◽  
Green Energy ◽  
Energy Industry ◽  
The Impact ◽  
The Capital Structure

The energy sector is expected to face fundamental challenges in the near future. On the one hand, it is experiencing a rapidly increasing demand for energy. At the same time, it is subject to the pressure of the climate policy due to environmental issues. For the same reason, the energy sector is forced to undertake costly investments to transform production from black to green energy. The issue of financing has become one of the key problems of the energy sector, especially in those countries in which energy production traditionally is based on fossil fuels, i.e., coal. The paper aims to investigate the impact of corporate governance on the capital structure of companies from the energy industry. We use three proxies of corporate governance quality: institutional investors, the board size, and state ownership and investigate their impact on capital structure. Our findings suggest that the latter two negatively impact debt levels. In our model, we control for financial factors and CEO personal characteristics. We use a Polish setting since transformational problems of the energy sector in Poland are especially visible. At the same time, energy companies in Poland are subject to the strict EU climate policy.

scholarly journals THE IMPACT OF STATE AFFILIATED DIRECTORS ON THE CAPITAL STRUCTURE SPEED OF ADJUSTMENT IN AN EMERGING MAKRET

2018 ◽  
Vol 18 (1) ◽  
pp. 133-148
Author(s):  
Hafezali Iqbal Hussain ◽  
Irwan Shah Zainal Abidin ◽  
Rashidah Kamarulzaman ◽  
Fekri Ali Shawtari
Keyword(s):  
Capital Structure ◽  
Speed Of Adjustment ◽  
The Impact ◽  
The Capital Structure

Role of Credit Rating in determining Capital structure: Evidence from Non-Financial sector of Pakistan

2020 ◽  
Vol 38 (3) ◽  
Author(s):  
Shoaib Ali ◽  
Imran Yousaf ◽  
Muhammad Naveed
Keyword(s):  
Capital Structure ◽  
Credit Rating ◽  
Least Square ◽  
Annual Data ◽  
Leverage Ratio ◽  
Financial Decisions ◽  
Financial Firms ◽  
High Level ◽  
The Impact ◽  
The Capital Structure

This paper aims to examine the impact of external credit ratings on the financial decisions of the firms in Pakistan.  This study uses the annual data of 70 non-financial firms for the period 2012-2018. It uses ordinary least square (OLS) to estimate the impact of credit rating on capital structure. The results show that rated firm has a high level of leverage. Moreover, Profitability and tanagability are also found to be a significantly negative determinant of the capital structure, whereas, size of the firm has a significant positive relationship with the capital structure of the firm.  Besides, there exists a non-linear relationship between the credit rating and the capital structure. The rated firms have higher leverage as compared to the non-rated firms. The high and low rated firms have a low level of leverage, while mid rated firms have a higher leverage ratio. The finding of the study have practical implications for the manager; they can have easier access to the financial market by just having a credit rating no matter high or low. Policymakers must stress upon the rating agencies to keep improving themselves as their rating severs as the measure to judge the creditworthiness of the firm by both the investors and management as well.

scholarly journals The Impact of CSR on the Capital Structure of High-Tech Companies in Poland

2021 ◽  
Vol 13 (10) ◽  
pp. 5467
Author(s):  
Barbara Grabinska ◽  
Dorota Kedzior ◽  
Marcin Kedzior ◽  
Konrad Grabinski
Keyword(s):  
Capital Structure ◽  
Financial Reporting ◽  
Academic Research ◽  
Debt Financing ◽  
High Tech ◽  
High Tech Industry ◽  
Reporting Practices ◽  
Csr Reporting ◽  
The Impact ◽  
The Capital Structure

So far, CSR’s role in the high-tech industry is not fully explained by academic research, especially concerning the most burdensome obstacle to firms’ growth: acquiring debt financing. The paper aims to solve this puzzle and investigate whether young high-tech companies can attract more debt by engaging in CSR activity. To address the high-tech industry specificity, we divided CSR-reporting practice into three broad categories: employee, social, and environmental and analyzed their impact on the capital structure. Our sample consists of 92 firm-year observations covering the period 2014–2018. Using a regression method, we found out that only employee CSR plays a statistically significant role in shaping capital structure. We did not find evidence for the influence of the other types of CSR-reporting practices. The results suggest that employees are the key resource of high-tech companies, and, for this reason, they are at the management’s focus. This fact is visible at the financial reporting level and, as we interpret results, is also considered by credit providers. In a more general way, our results suggest that firms tend to choose CSR based on the importance of crucial resources.

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