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

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.

Download Full-text

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

International Journal of Business and Management ◽

10.5539/ijbm.v13n8p26 ◽

2018 ◽

Vol 13 (8) ◽

pp. 26 ◽

Cited By ~ 1

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.

Download Full-text

Capital structure and corporate governance: the French case

Corporate Ownership and Control ◽

10.22495/cocv5i2c4p4 ◽

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

Download Full-text

Capital structure and corporate governance of soccer clubs

Management Research Review ◽

10.1108/mrr-09-2012-0207 ◽

2014 ◽

Vol 37 (7) ◽

pp. 658-678 ◽

Cited By ~ 9

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.

Download Full-text

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

Journal of Operations and Strategic Planning ◽

10.1177/2516600x20949774 ◽

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.

Download Full-text

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

Review of Quantitative Finance and Accounting ◽

10.1007/s11156-021-01000-4 ◽

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.

Download Full-text

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

Studies of Applied Economics ◽

10.25115/eea.v38i3.3066 ◽

2020 ◽

Vol 38 (3) ◽

Cited By ~ 1

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.

Download Full-text

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

Sustainability ◽

10.3390/su13105467 ◽

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.

Download Full-text

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

Corporate Governance ◽

10.1108/cg-11-2019-0343 ◽

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.

Download Full-text