Capital structure and firm performance: the role of corporate governance

2021 ◽  
Vol 15 (4) ◽  
pp. 436
Author(s):  
Hussain Muhammad ◽  
Stefania Migliori ◽  
Sana Mohsni
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Capital Structure

scholarly journals Influence of Capital Structure on Corporate Performance of Listed Firm in PSX: Role of External Factors

2021 ◽  
Vol 7 (3) ◽  
Author(s):  
Abdul Hameed ◽  
Farheen Zahra Hussain ◽  
Khawar Naheed ◽  
Muhammad Sadiq Shahid
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Debt Financing ◽  
External Factors ◽  
Least Square ◽  
Total Debt ◽  
Integral Role ◽  
Equity Ratio ◽  
The Impact

Purpose: A company’s capital structure is a blend of its equity and debt financing and is considered a significant factor in the valuation of any firm. The decisions related to capital structure formation play an integral role for the firms, therefore; this research tends to explore the factors of capital structure and their impact on firm performance. For this purpose, financial data for different listed companies in PSX has been gathered, and dividends and taxes are used as firm external factors.  Design/Methodology/Approach: To examine the impact, the panel data has been used for the period 2016-2020 and panel least square has been applied. Findings: The findings suggest that among the variables current ratio, dividends, taxation, total debt to total equity ratio, and the firm size are statistically significant to profitability. The study also concludes that dividends and tax have a greater impact on capital structure and firm performance.   Implications/Originality/Value: Managers and owners of the firms must make sure that their profits are used for future investments rather than payment of debts to avoid bankruptcy.  

scholarly journals Toward Firm Performance in Indonesia: The Role of Good Corporate Governance and Investment Opportunity Set

2021 ◽  
Vol 17 (1) ◽  
pp. 81-90
Author(s):  
Dedi Rusdi ◽  
Indri Kartika ◽  
Maya Indriastuti
Keyword(s):  
Corporate Governance ◽  
Structural Equation Modeling ◽  
Firm Performance ◽  
Structural Equation ◽  
Equation Modeling ◽  
Investment Opportunity ◽  
Purposive Sampling ◽  
Good Corporate Governance ◽  
Investment Opportunity Set

Abstract: This study examined the role of good corporate governance and investment opportunity set in maintaining firm performance. This study's sample population comprised 240 manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2019. The research sample was selected using a purposive sampling method. The data were analyzed by using structural equation modeling analysis (SEM). The results showed that good corporate governance in terms of board size had a negative effect on firm performance. Meanwhile, good corporate governance in terms of board independence and investment opportunity set had a positive effect on firm performance.Keywords: good corporate governance, investment opportunity set, firm performance Menuju Kinerja Perusahaan di Indonesia: Peran Good Corporate Governance dan Investment Opportunity Set Abstrak: Studi ini menguji peran good corporate governance dan investment opportunity set dalam menjaga kinerja perusahaan. Populasi sampel penelitian terdiri dari 240 perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia dari tahun 2016 hingga 2019. Sampel penelitian dipilih dengan menggunakan metode purposive sampling. Analisis data menggunakan analisis structural equation modeling (SEM). Hasil penelitian menunjukkan bahwa good corporate governance ditinjau dari ukuran dewan komisaris berpengaruh negatif terhadap kinerja perusahaan. Sedangkan good corporate governance ditinjau dari independensi dewan komisaris dan investment opportunity set berpengaruh positif terhadap kinerja perusahaan.Kata kunci: good corporate governance, investment opportunity set, kinerja perusahaan

Role of discretionary earning management in corporate governance-value and corporate governance-risk relationships

2020 ◽  
Vol 20 (4) ◽  
pp. 561-581 ◽  
Author(s):  
Affaf Asghar ◽  
Seemab Sajjad ◽  
Aamer Shahzad ◽  
Bolaji Tunde Matemilola
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Panel Data ◽  
Firm Value ◽  
Emerging Economy ◽  
Earning Management ◽  
Firm Risk ◽  
Content Type ◽  
Single Study

Purpose Corporate governance (CG) is an ongoing interesting topic getting the attention of market participant, business regulators and researchers in today’s business environment. The purpose of this study is to analyze the moderating role of earnings management on CG-value and CG-risk relationship in the emerging economy of Pakistan. Design/methodology/approach A panel data analysis is used in this study. A panel data of 71 non-financial listed companies of Pakistan for the 2008-2017 period is considered for this study. Secondary data is collected from the annual reports of non-financial firms listed on PSX. Seven econometric equations are developed to test the research hypothesis. Findings The results reveal that CG significantly enhances the firm value and performance measures. Moreover, CG mitigates the practices of earning management and eliminates the risk that develops opportunistic behavior among managers to commit frauds. Practical implications The results of this study suggest that the board of directors (BODs) should intensify their governance role and ensure that the executives perform their duties to maximize the wealth of the shareholders and not engage in any misrepresentation of accounts that may lower the company position and decrease the firm value. Moreover, the managers should be informed about their accountability and acknowledged that at the end of the year, they would be audited by an expert’s auditors for their responsibilities. Concerning regulatory bodies, regulatory authorities should ensure that there must be at least one independent member on the board. The better-governed system reduces both agency conflicts and enhances firm value. Originality/value A number of studies have already been undertaken by multiple investigators to build connection among CG with firm performance, but there is not even a single study in the literature that considers CG, firm value, firm Risk and discretionary earning management as a whole in one model to generalize its results in the emerging economy of Pakistan. A fundamental element of current analyzation process addresses that this is the very first graft of study conducted in Pakistan having combination of four variables together in one revision. There is minimal work that focuses on moderating effects of earning management on the CG-value and CG-risk relationships. This study uses two standard measures of firm performance (i.e. ROA and Tobin’s Q), one proxy of earning management (DEM) and three attributes of CG (board size, audit quality and ownership structure). Previously, researchers have not investigated a model that combines variables (CG as independent and Firm performance and Firm Risk as dependent along with DEM as moderator) in a single study.

scholarly journals The Role of Corporate Governance in Firm Performance

2017 ◽  
Vol 34 ◽  
pp. 13003 ◽  
Author(s):  
Zahroh Naimah ◽  
Hamidah
Keyword(s):  
Corporate Governance ◽  
Firm Performance

scholarly journals Corporate Governance and Firm Performance: The Role of the Board and Audit Committee

2018 ◽  
Vol 10 (1) ◽  
pp. 210
Author(s):  
Netai Kumar Saha ◽  
Rehnuma Hoque Moutushi ◽  
Mohammad Salauddin
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Group Dynamics ◽  
Internal Control ◽  
Audit Committee ◽  
Performance Indicator ◽  
Positive Impact ◽  
Board Independence ◽  
Board Size

Corporate Governance (CG) has become a paramount issue due to its greater significance of practicing accuracy, maintaining accountability, establishing effective internal control and regulating organizations for achieving organizational goals. The study is conducted to explore the relationship between corporate governance and firm performance with considering the role of board and audit committee. The multiple liner regression analysis is used as the underlying statistical test on the dependent variables, ROA, ROE and TQ to test the association between the independent variables (board size, board independence, size of audit committee and audit committee composition) with firm performance. Homogeneous purposive sampling has been used. The sample size of the study is 81 listed companies in DSE. The results of the study signify that board independence ratio and audit committee is statistically significant and has positive impact on ROA and TQ. But it is not statistically significant in the case of firm performance indicator ROE in this study. In addition to, Board size is not statistically significant and has negative correlation with firm performance due to group dynamics, communication gaps and indecisiveness of larger groups.

scholarly journals Corporate governance and performance of financial institution

2019 ◽  
Vol 16 (1-1) ◽  
pp. 203-216 ◽  
Author(s):  
Juliet Wakaisuka-Isingoma
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Institutions ◽  
Ownership Structure ◽  
Information Disclosure ◽  
Positive Relationship ◽  
Developing Economies ◽  
Cross Sectional ◽  
Financial Transparency

The role of banking and insurance as an animated component of any economy has been widely recognized in the evolution of literature (Shrutikeerti & Amlan, 2017). The financial liberalization efforts taken by various developing economies had the central bearing on their financial institutions (Shrutikeerti & Amlan, 2016). The development of insurance and banking sectors play an important role in stimulating financial development and consequently the growth of the economy. Enhancing firm performance predicted through ownership structure, information disclosure, financial transparency and board profile safeguards reputation, yields effective risk management systems and yet helps firms achieve their business objectives. The study employed a sample of 103 financial institutions and adopted a descriptive cross-sectional survey design with a Pearson correlation coefficient. Reliability, validity and exploratory factor analysis with principal components and Cronbach’s alpha as well as hierarchical regression was reasonable for analysis but also directed using the Partial Least Square (PLS) modelling which was helpful in attesting the measurement and structural models appropriate for the performance of financial institutions. Reveal a statistically significant and positive relationship between corporate governance and firm performance. PLS modelling assented the structural and measurement models and recognized that corporate governance is statistically significant and predict firm performance through its different constructs of information disclosure, financial transparency, and ownership structure and board profile. Equally, firm performance demonstrated that management efficiency, earnings quality, asset quality, capital adequacy and liquidity were key dimensions. The study was cross-sectional and a longitudinal study is necessary to understand the dynamics of corporate governance and firm performance over a period of time. The results extend the understanding of the role of corporate governance in promoting firm performance in financial institutions. Additionally, the results add evidence to the growing body of research focusing on interdisciplinary aspects as well as the relationship between corporate governance and firm performance. Overall, there is a significant positive relationship between corporate governance and firm performance.

scholarly journals Board of directors, capital structure, investment decisions and firm-performance: An empirical study of Nordic firms

2020 ◽  
Vol 17 (4, Special Issue) ◽  
pp. 377-390
Author(s):  
Shab Hundal ◽  
Anne Eskola
Keyword(s):  
Principal Component Analysis ◽  
Corporate Governance ◽  
Firm Performance ◽  
Capital Structure ◽  
Corporate Finance ◽  
Board Of Directors ◽  
Boards Of Directors ◽  
Investment Decisions ◽  
Principal Component ◽  
The Impact

Firms’ financing, boards of directors’ characteristics, investments, and firm-performance (financial and non-financial) occupy a pivotal place in corporate finance and corporate governance literature. The current study explores if causalities between the abovementioned four distinct albeit inter-related phenomena follow any pattern. The data comprising of 1240 firm-years belonging to Finland, Norway, Sweden, and Denmark for the period of 2003 to 2018 have been analyzed by applying multivariate linear regression and principal component analysis. The findings show that the impact of boards of directors’ characteristics is stronger on capital structure, however, weaker on investments and financial performance. The major contribution of the article is creating a set orderly and sequential causalities between financing, boards of directors’ characteristics, investments, and firm-performance.

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