scholarly journals Corporate Governance Quality and Capital Structure Decisions: Empirical Evidence from Canada

2019 ◽  
Vol 6 (9) ◽  
pp. 303-311
Author(s):  
Dan Lin ◽  
Lu Lin
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Empirical Evidence ◽  
Composite Index ◽  
Free Cash Flow ◽  
Debt Financing ◽  
Cost Of Debt ◽  
Financing Decisions ◽  
Governance Quality ◽  
Corporate Governance Quality

This study examines the relationship between corporate governance quality and capital structure of firms listed on the S&P/TSX composite index between 2009 and 2012. Using an aggregate corporate governance index, this study finds support for the outcome hypothesis, which argues that capital structure is an “outcome” of corporate governance quality. Governance quality is found to be positively associated with firms’ leverage. Firms with lower governance quality have lower leverage as these firms’ managers do not like to have only little free cash flow leftover or have extra constraints imposed by debt financing. In contrast, firms with higher governance quality are more leveraged because these firms have lower agency costs and thus lower cost of debt financing. As a result, they can take on more debts. The empirical evidence from this study illuminates important links between governance quality and financing decisions of firms.

scholarly journals Determinants of capital structure and its impact on corporate governance: An emerging market empirical study

2017 ◽  
Vol 1 (1) ◽  
pp. 17-32 ◽  
Author(s):  
Maqbool Ahmad ◽  
Basheer Ahmed ◽  
Munib Badar
Keyword(s):  
Decision Making ◽  
Corporate Governance ◽  
Capital Structure ◽  
Audit Committee ◽  
Emerging Market ◽  
Debt Financing ◽  
Debt Ratio ◽  
Return On Assets ◽  
Financing Decision ◽  
Financing Decisions

This research endeavored to explore two schemes of literature pertains to capital structure i.e. antecedents and consequences of debt borrowing on firm specific and corporate governance factors. This research explores the determinants of capital structure to ascertain whether the financing decisions are optimal or not. Non-financial sector firms accumulated 70% of total firms listed on Pakistan Stock Exchange (PSX). To conclude proposed research, unbalance panel data for 160 non-financial firms listed at PSX from 2007 to 2011 is selected. Results revealed that Return on assets contributes 25% influence on financing decisions regarding debt. Similarly Debt borrowings affect negatively in overall profits. However, its intensity differs within different levels of its determinants. Corporate Governance CG index is negatively associated with debt ratio. Return on assets in terms of size of firm is impacted 29%. Institutional Ownership and debt financing has found a negative association with one and each other. Ownership concentration and debt ratio have strong positive binding between them. Significance of Board Size holds only 2% in debt financing decision making whereas CEO duality holds 68% significance in debt financing decision making. Audit Committee independence and debt ratio are also negatively related. Non-executive directors are found with no influence on capital structure decision making. Board Independence is positively related with leverage and found with no particular implementation of debt financing decisions makings. The outcome of this study can be used to provide managerial information whether their financing decisions are optimal or not and how they should enhance the scope of their financing decisions.

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.

scholarly journals The corporate governance drivers: What relations with performance and risk? Empirical evidence from Italian contex

2013 ◽  
Vol 10 (4) ◽  
pp. 510-523 ◽  
Author(s):  
Francesca Bernini ◽  
Giovanna Mariani ◽  
Delio Panaro
Keyword(s):  
Corporate Governance ◽  
Empirical Evidence ◽  
Default Risk ◽  
Family Firms ◽  
Good Governance ◽  
Z Score ◽  
Governance Quality ◽  
Good Relation ◽  
And Performance ◽  
Corporate Governance Quality

Considering a sample of Italian firms and defining a good Governance index (gGI), we investigated if there is a relation between the gGI, the performance and the default risk and which governance determinants are most responsible of these effects. To deepen the analysis, the aforementioned relations are also observed by comparing family and non-family firms and the companies more or less active in M&A. We found that the Corporate Governance quality presents some correlations with performance and risk. The non-family companies are better structured, showing a positive correlation between some Corporate Governance drivers and performance and Z-score. Furthermore, the “well-advised” firms in external strategies are able to obtain a better correlation with performance and also a good relation with Z-score.

Conditional Conservatism and Audit Fees

2014 ◽  
Vol 29 (1) ◽  
pp. 83-113 ◽  
Author(s):  
Hye Seung (Grace) Lee ◽  
Xu Li ◽  
Heibatollah Sami
Keyword(s):  
Corporate Governance ◽  
Potential Benefit ◽  
Audit Fees ◽  
Accounting Conservatism ◽  
Audit Risk ◽  
Debt Contracting ◽  
Conditional Conservatism ◽  
Governance Quality ◽  
Corporate Governance Quality ◽  
The Impact

SYNOPSIS In this study, we examine the impact of conditional conservatism on audit fees and, more importantly, the influence of corporate governance on this relationship. Prior literature presents evidence regarding explanations for the existence and pervasiveness of accounting conservatism such as compensation and debt contracting, shareholder litigation, taxation, and accounting regulation. However, there is very limited evidence or discussion of the potential benefit of accounting conservatism on audit risk and thus audit fees, and how the potential benefit can be attenuated by corporate governance quality. Using a sample of firm-year observations over the period of 2004–2009, we provide evidence consistent with conditional conservatism and firms' commitment to such conservatism reducing their audit fees. However, our evidence shows that this reduction in audit fees is moderated by higher corporate governance quality. These results have implications for auditors, regulators, standard setters, and firms' managers. In addition, our study extends the literature on the determinants of audit fees. JEL Classifications: M41; M42; D81; D22.

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.

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