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 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

Audit committee characteristics and the moderating effect of Malaysian code of corporate governance on IPO liquidity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Amal Mohammed Al-Masawa ◽  
Rasidah Mohd-Rashid ◽  
Hamdan Amer Al-Jaifi ◽  
Shaker Dahan Al-Duais
Keyword(s):  
Corporate Governance ◽  
Initial Public Offerings ◽  
Audit Committee ◽  
Ordinary Least Squares ◽  
Moderating Effect ◽  
Least Squares Regression ◽  
Content Type ◽  
Code Of Corporate Governance ◽  
The Impact ◽  
The Relationship

Purpose This study aims to investigate the link between audit committee characteristics and the liquidity of initial public offerings (IPOs) in Malaysia, which is an emerging economy in Southeast Asia. Another purpose of this study is to examine the moderating effect of the revised Malaysian code of corporate governance (MCCG) on the link between audit committee characteristics and IPO liquidity. Design/methodology/approach The final sample consists of 304 Malaysian IPOs listed in 2002–2017. This study uses ordinary least squares regression method to analyse the data. To confirm this study’s findings, a hierarchical or four-stage regression analysis is used to compare the t-values of the main and moderate regression models. Findings The findings show that audit committee characteristics (size and director independence) have a positive and significant relationship with IPO liquidity. Also, the revised MCCG positively moderates the relationship between audit committee characteristics and IPO liquidity. Research limitations/implications This study’s findings indicate that companies with higher audit committee independence have a more effective monitoring mechanism that mitigates information asymmetry, thus reducing adverse selection issues during share trading. Practical implications Policymakers could use the results of this study in developing policies for IPO liquidity improvements. Additionally, the findings are useful for traders and investors in their investment decision-making. For companies, the findings highlight the crucial role of the audit committee as part of the control system that monitors corporate governance. Originality/value To the authors’ knowledge, this work is a pioneering study in the context of a developing country, specifically Malaysia that investigates the impact of audit committee characteristics on IPO liquidity. Previously, the link between corporate governance and IPO liquidity had not been investigated in Malaysia. This study also contributes to the IPO literature by providing empirical evidence regarding the moderating effect of the revised MCCG on the relationship between audit committee characteristics and IPO liquidity.

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 The Impact Of Dividend Policy, Managerial Ownership, Institutional Ownership To Capital Structure On Manufacturing Company In Indonesia Stock Exchange (Idx) Period 2012-2016

2018 ◽  
Vol 2 (1) ◽  
pp. 28-39
Author(s):  
Ratna Putri Indah Puspita ◽  
Suherman Suherman
Keyword(s):  
Capital Structure ◽  
Dividend Policy ◽  
Random Effect Model ◽  
Institutional Ownership ◽  
Managerial Ownership ◽  
Manufacturing Companies ◽  
Significant Negative Effect ◽  
Negative Effect ◽  
The Impact ◽  
The Capital Structure

This study aims to determine the effect of dividend policy, managerial ownership and institutional ownership on the capital structure of manufacturing companies listed on the IDX for the 2012-2016 period. The data used in this study is an annual report of the Manufacturing Sector listed on the IDX for the period 2012-2016. By using purposive sampling method, 56 companies were obtained and consisted of 280 observations. The model used in this research is panel data analysis using the Random Effect Model approach. The results of this study indicate that the dividend policy has a positive but not significant effect on DER, but has a significant positive effect on DAR. While managerial ownership is influential but not significantly negative on the capital structure (DER and DAR). Institutional ownership has a significant negative effect on DER, but has a negative but not significant effect on DAR. Profitability has a significant negative effect on the capital structure (DER and DAR), while the structure of assets and company size does not have a significant effect on the capital structure. (DER and DAR).

The Impact of Corporate Governance Mechanisms on the Relationship Between Cash Holdings and Audit Fees in Egyptian Listed Companies

2019 ◽  
Vol 9 (2) ◽  
pp. 314
Author(s):  
Eman Abdel-Wanis
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Cash Holdings ◽  
Audit Fees ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Relationship

This paper explores the impact of corporate governance mechanisms on the nature of the relationship between cash holdings and audit fees, which helps provide an opportunity to identify whether these mechanisms enable to mitigate agency problems, and thus lower audit fees through a sample of 78 Egyptian listed firms in EGX 100 during the period 2014-2016 using panel data analysis. Results indicated that cash holding increases auditing fees. The board characteristics affect negatively on the relationship between cash holdings and audit fees. Also, ownership structure affects negatively on the relationship between cash holdings and audit fees. As well audit committee affects negatively on the relationship between cash holdings and audit fees. There results support the view that corporate governance mitigate on the relationship between cash holdings and audit fees.

scholarly journals Pengaruh Intellectual Capital dan Corporate Governance Terhadap Kinerja Bank di Indonesia

2019 ◽  
Vol 2 (1) ◽  
pp. 57
Author(s):  
Jadzil Baihaqi
Keyword(s):  
Corporate Governance ◽  
Intellectual Capital ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Stock Exchange ◽  
Governance Mechanism ◽  
Moderation Effect ◽  
Corporate Governance Mechanism ◽  
The Impact ◽  
The Relationship

This study examines the impact of intellectual capital and corporate governance mechanism on banks’ performance both directly and also moderated effect. We used banks that were listed in the Indonesia Stock Exchange. The bank’s performance was measured by risk-based bank rating while intellectual capital was measured by the coefficient of VAICTM (Pulic, 1998). The corporate governance mechanism was measured based on the size of boards of directors, the composition of independent director, CEO remuneration, managerial ownership, the effectiveness of audit committee and ownership concentration. The result of the study shows that banks’ performance was positively influenced by intellectual capital. However, corporate governance mechanism did not influence the banks’ performance, while the moderation effect of corporate governance mechanism on the relationship between intellectual capital and banks’ performance was not confirmed.

scholarly journals Analisis Dampak Struktur Modal Terhadap Profitabilitas

2018 ◽  
Vol 1 (1) ◽  
Author(s):  
Dwi Setiarini ◽  
Sujiono Sujiono ◽  
Hadi Sumarsono
Keyword(s):  
Capital Structure ◽  
Negative Impact ◽  
Secondary Data ◽  
T Test ◽  
Return On Assets ◽  
Credit Cooperatives ◽  
Equity Ratio ◽  
Data Source ◽  
The Impact ◽  
The Capital Structure

Funding is an important issue that is taken into account by the company, both for the establishment and expansion of the business. Capital structure has an impact on profitability, with the improvement in capital structure, the company gives profits. The purpose of this study was to determine the impact of the capital structure measured by Debt to Equity Ratio (DER) on profitability as measured by Return on Assets (ROA) partially in Sharia Savings and Credit Cooperatives Cooperatives or KSK Komment Year 2016 - 2019. This researcher uses regression analysis simple linear and t test. The data source used in this study is secondary data. The results of the study concluded that the capital structure measured by Debt to Equity Ratio (DER) partially had a negative impact on Return on Assets (ROA). While the t test on the variable Debt to Equity Ratio (DER) partially proved to have no significant impact on Return on Assets (ROA).

scholarly journals The Effect of Firm Size and Profitability on Firm Value with Capital Structure as Intervening Variables in Indonesia

2019 ◽  
Vol 4 (2) ◽  
pp. 55
Author(s):  
Indra Arifin Djashan
Keyword(s):  
Capital Structure ◽  
Firm Size ◽  
Firm Value ◽  
Stock Exchange ◽  
Company Performance ◽  
Purposive Sampling ◽  
The Impact ◽  
The Relationship ◽  
Intervening Variables ◽  
The Capital Structure

This study examines the impact of firm size and profitability on firm value with capital structure as an intervening variable in financial companies listed on the Indonesia Stock Exchange during three years. The method used for sampling is purposive sampling based on predetermined criteria. The number of samples in this study were 73 companies. Measurement of profitability is using ROA and ROE as one indicator to see company performance. The main purpose of companies that have gone public is to increase the prosperity of the owners or shareholders through increasing the value of the company. The results showed that the improvement of profitability and firm size may improve its capital structure. The improvement of profitability and the firm size may increase significantly the firm value. The results of mediating test showed that the capital structure is not able to mediate the relationship between the profitability and firm size to firm value

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 R&D Narrative Disclosure, Corporate Governance And Market Value: Evidence From France

2015 ◽  
Vol 32 (1) ◽  
pp. 111 ◽  
Author(s):  
Mehdi Nekhili ◽  
Khaled Hussainey ◽  
Walid Cheffi ◽  
Tawhid Chtioui ◽  
Hubert Tchakoute-Tchuigoua
Keyword(s):  
Corporate Governance ◽  
Panel Data ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Market Value ◽  
Negative Association ◽  
Ceteris Paribus ◽  
Narrative Disclosure ◽  
The Impact ◽  
The Relationship

<p>We investigate the impact of R&amp;D narrative disclosure on the market value of equity for a sample of French companies during the period 2000–2004. Using 3SLS estimation on a panel data of 98 French firms, we find, ceteris paribus, positive (but insignificant) association between R&amp;D voluntary disclosure and the market value of equity. Both R&amp;D intensity and R&amp;D capitalization lead French firms to disclose more R&amp;D narrative information. However, they impact differently the relationship between R&amp;D-related disclosure and market value. Indeed, a positive and significant association is found when we control for R&amp;D capitalization. In contrast, when controlling for R&amp;D intensity, we find a negative association. We also find that equity-based compensation and audit committee independence are the most important drivers for R&amp;D narrative disclosure. </p>

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