scholarly journals Corporate Governance Practices and Firm’s Capital Structure Decisions: An Empirical Evidence of An Emerging Economy

2017 ◽  
Vol 6 (4) ◽  
pp. 115
Author(s):  
Hassan M. Hafez
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Emerging Economies ◽  
Descriptive Statistics ◽  
Systematic Research ◽  
Hausman Test ◽  
Listed Firms ◽  
Growing Body ◽  
Governance Practices ◽  
Main Driver

There is a growing body of literature that recognises the importance of corporate governance practices on capital structure decisions. However, results are not consistent and only a few studies have been able to draw on any systematic research trying to quantify the relation between corporate governance practices and capital structure decisions and to acquire bits of knowledge of such relation of listed firms in Emerging Economies. Because of the fact that impact use of the corporate governance rules can have on capital structure decisions.The main driver of this research is to investigate the sound use of the Egyptian corporate governance practices on capital structure decisions of listed firms in Egypt over the period 2007 to 2016 utilizing a sample of 50 listed firms in EGX 100. Empirical results demonstrate the significant relationship between various inner and outer corporate governance practices and capital structure decisions of listed firms in Egypt. The findings were quantitatively approved through utilizing E-Views programming for examining panel data. Descriptive statistics, Multi-Collinearity test, Hausman test and multiple regression have been utilized to distinguish the major determinates of capital structure decisions and assess whether it has a significant impact on capital structure decisions. 

Analysis of the Role of Corporate Governance on Listed Firm’s Capital Structure: The East African Stock Markets Perspective

2019 ◽  
Vol 9 (3) ◽  
pp. 143
Author(s):  
Erick Lusekelo Mwambuli
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Stock Markets ◽  
Debt Ratio ◽  
East African ◽  
African Region ◽  
Listed Firms ◽  
Governance Practices ◽  
East African Region

This paper examine the role of corporate governance on listed firm’s capital structure decisions in developing economies, East African stock markets. To achieve the objective of this paper, we used a strongly balanced panel dataset of 320 observations (i.e. a sample of 32 non-financial listed firms in East African region from 2006-2015. Measures for capital structure decisions were short term debt ratio (STDR),long term debt ratio (LTDR) and total debt ratio (TDR) as dependent variables and explanatory (independent) variable was corporate governance practices measured by researcher-constructed index consisting of 28 corporate governance provisions ;thus the corporate governance practices index (CGPI). Furthermore, the effects of control variable such as firm size (SIZ), the level of economic development (GDP) and industry dummies were also examined. The panel corrected standard errors (PCSEs) regression model was employed for corporate governance practices and capital structure decisions to analyze the data. Our results indicate a statistically significant negative effect of corporate governance practices on capital structure decisions at 5% significance level. Our paper contributes to both literature and the practical implications, because our paper provides a first insight of the corporate governance practices and its effects on capital structure decisions for the East African regional stock markets. The paper recommends to securities markets regulatory authorities in East African region such as East African member states securities regulatory authority (EASRA) and their respective countries securities markets regulatory authorities to stimulates new efforts towards better corporate governance practices to listed firms in the regional bloc due to its statistically significant effects on capital structure decisions and future study can be extended after considering external corporate governance mechanisms.

scholarly journals The relationship between Malaysian public-listed firms’ corporate governance and their capital structure

2019 ◽  
Vol 16 (3) ◽  
pp. 98-112
Author(s):  
Fahed Abdullah Abdlazez ◽  
Alhashmi Aboubaker Lasyoud ◽  
Abdlmutaleb Boshanna
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Annual Reports ◽  
Debt Ratio ◽  
Short Term ◽  
Listed Firms ◽  
Governance Practices ◽  
Equity Ratio ◽  
The Relationship

The purpose of this paper is to investigate the relationship between corporate governance practices and capital structure of public-listed companies in Malaysia. Using the annual reports of 273 Malaysian public-listed firms on the Bursa Malaysia between 2008 and 2012, hierarchical multiple regression analysis was conducted. Corporate governance was measured by variables including board size, CEO duality, ownership structure, and board meeting. Capital structure was measured through four variables: debt-to-equity ratio, long-term debts, short-term debts, and debt ratio. The findings indicated that corporate governance practices have a positive influence on the debt-equity ratio, long-term debt, short-term debt and a debt ratio of capital structure. However, corporate governance practices’ influence on the debt ratio is found statistically insignificant. The findings also indicate that firm size moderates the relationship between corporate governance variables and capital structure. Empirically, these findings are useful for measuring and understanding financing decisions taken by the Malaysian public listed firms. It also offers insights to policymakers interested in enhancing the role of corporate governance in formulating management strategies.

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 Performance, corporate governance and new regulation

2017 ◽  
Vol 9 (18) ◽  
Author(s):  
Heriberto García
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Financial Market ◽  
Information Disclosure ◽  
Potential Growth ◽  
Listed Firms ◽  
Risk Return ◽  
Corporate Governance Code ◽  
Governance Practices ◽  
The Relationship

Abstract. After the adoption of the Corporate Governance Code (Code) in Mexico, many companies increased financial performance and the leveraged during the following five years; we investigated the effect of how those firms improved the corporate governance practices and how was translated into better risk return company. We analyzed how and where better corporate governance practices affects performance and what was the relationship with Transparency, New Regulation and Governance Practices. Also we explored the gaps between transparency and information disclosure of Mexican Firms listed in U.S stockexchange and non U.S listed firms our findings were related to the potential growth of the Mexico Financial Market, Law and Finance.Keywords: corporate governance, financial performance, regulationResumen. Después de la adopción del Código de Gobierno Corporativo en México, algunas compañías incrementaron el desempeño financiero y el uso de deuda durante los siguientes cinco anos, nuestra investigación se enfoca en como dichas compañías mejoraron sus prácticas de gobierno corporativo y como estas prácticas se han traducido en un mejor relación de riesgo y rendimiento. En esta investigación exploramos cómo y en dónde mejores prácticas de gobierno corporativo afectan el desempeño y qué relación tiene con laTransparencia, Nuevas Regulaciones y prácticas de Gobierno Corporativo. Con lo anterior también identificamos aquellas compañías que cotizan fuera de México para identificar potenciales diferencias en dichas prácticas.Palabras clave: desempeño financiero, gobierno corporativo, regulación

scholarly journals Corporate Governance And Voluntary Disclosure In France

2013 ◽  
Vol 29 (2) ◽  
pp. 561 ◽  
Author(s):  
Carlos P. Barros ◽  
Sabri Boubaker ◽  
Amal Hamrouni
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Audit Quality ◽  
Annual Reports ◽  
Managerial Ownership ◽  
Board Meeting ◽  
External Audit ◽  
Listed Firms ◽  
Governance Practices

This paper investigates the effect of corporate governance practices on the extent of voluntary disclosure in France. Using a panel of 206 non-financial French listed firms during the period 20062009, we find evidence that voluntary disclosure in annual reports increases with managerial ownership, board and audit committee independence, board meeting frequency, and external audit quality. We also find that frequency of audit committee meetings and diligence of board and auditing are associated with decreased disclosure. Additional findings show that larger, more profitable, and less indebted firms have greater voluntary disclosure.

scholarly journals Corporate governance and capital structure in the periods of financial distress. Evidence from Greece

2017 ◽  
Vol 14 (1) ◽  
pp. 254-262 ◽  
Author(s):  
George Kyriazopoulos
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Financial Distress ◽  
Sovereign Debt ◽  
Negative Impact ◽  
Stock Exchange ◽  
Debt Crisis ◽  
Outside Directors ◽  
Listed Firms ◽  
Athens Stock Exchange

This study examines the relationship between corporate governance and capital structure employing data from the Athens Stock Exchange for the period 2005-2014. This period encompasses the sovereign debt crisis erupted in Greece at the end of 2009 and still continues to hit households and businesses alike. The results from the panel regression analysis signify the role of corporate governance structures in determining the capital structure of the Greek listed firms. In particular, the empirical results reveal a negative impact of board size on debt levels, which is weakened during the debt crisis period. In contrast, the presence of outside directors provides the appropriate certification to use more debt. Finally, growth opportunities and profitability are the two firm-specific factors which effect was weakened during the financially-constraint period.

scholarly journals Corporate Governance and Cost of Capital: Evidence from Emerging Market

Risks ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 104
Author(s):  
Muhammad Yar Khan ◽  
Anam Javeed ◽  
Ly Kim Cuong ◽  
Ha Pham
Keyword(s):  
Corporate Governance ◽  
Lower Cost ◽  
Cost Of Capital ◽  
Emerging Market ◽  
Firm Level ◽  
Listed Firms ◽  
Corporate Failure ◽  
Governance Index ◽  
Governance Practices ◽  
Code Of Corporate Governance

This study used a researcher self-constructed corporate governance index as a proxy to measure the firm-level corporate governance compliance and disclosure with the 2002 Pakistani Code of Corporate Governance, to examine the relationship between corporate governance and cost of capital. We found a negative and significant association between the Pakistani Corporate Governance Index (PCGI) and block ownership with the firm-level cost of capital. On average, better-governed Pakistani listed firms tend to be associated with a lower cost of capital than their poorly governed counterparts are. As an emerging market, good corporate governance practices are mainly related to minimise corporate failure and assist firms in attracting capital at a lower cost.

A theoretical and econometric evaluation of corporate governance and capital structure in JSE-listed companies

2019 ◽  
Vol 19 (5) ◽  
pp. 1063-1081 ◽  
Author(s):  
Navitha Singh Sewpersadh
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Audit Committee ◽  
Firm Growth ◽  
Listed Companies ◽  
Annual Reports ◽  
Ceo Duality ◽  
Content Type ◽  
Governance Practices ◽  
Director Ownership

PurposeA vital resource for attracting investments and boosting economic growth is compliance with corporate-governance practices. To achieve firm growth, businesses often rely on leverage as a source of finance, which has tax-saving benefits but could attract financial distress costs. In this context, this study aims to examine the relationship between corporate governance and the use of debt financing in Johannesburg Stock Exchange (JSE)-listed companies.Design/methodology/approachThis study used a six-year period to examine 713 annual reports in an unbalanced panel of 130 JSE-listed companies from 2011 to 2016. The empirical econometric methodology used was the two-step difference generalised method of moments estimation model, which is robust in controlling endogeneity and potential bi-directional causality between leverage and corporate governance.FindingsThis study illustrated that corporate governance practices and firm-specific variables such as profitability, firm size and firm age have a significant influence on the capital structure decisions of JSE-listed firms. This study found support for four out of the six hypotheses. CEO duality and director ownership are positively correlated with leverage, whereas audit committee independence and board size are negatively correlated with leverage. This study also found contraventions of board independence, audit committee independence and CEO duality. The technology sector was the least compliant, with only 40 per cent of their boards being independent. The consumer-services sector had the maximum presence of CEO duality (7 per cent). The industrial sector had the highest average director ownership (18 per cent). The heath-care sector had 28 per cent of their audit committees in contravention of the independence rule.Practical implicationsA useful analysis of the theoretical frameworks used by academic writers are provided. This study revealed the governance practices contravened by the relevant sectors, as well as the associations between corporate governance and leverage.Originality/valueThe study contributes to the literature on capital structure and corporate governance by an emerging economy such as South Africa (SA) which has not been explored. This study’s results have key implications for policy-makers, practitioners, investors and regulatory authorities. This study informs these constituencies about a set of governance attributes that are catalysts and/or inhibitors of leverage.

scholarly journals The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms

2017 ◽  
Vol 16 (4) ◽  
pp. 444-461 ◽  
Author(s):  
Agyenim Boateng ◽  
Huifen Cai ◽  
Daniel Borgia ◽  
Xiao Gang Bi ◽  
Franklin Nnaemeka Ngwu
Keyword(s):  
Corporate Governance ◽  
Capital Structure ◽  
Fixed Effects ◽  
The State ◽  
Ownership Concentration ◽  
Governance Mechanisms ◽  
Data Set ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Governance Mechanisms

Purpose The purpose of this paper is to examine the effects of internal corporate governance mechanisms on the capital structure decisions of Chinese-listed firms. Design/methodology/approach Using a large and more recent data set consisting of 2,386 Chinese-listed firms over the period from 1998 to 2012, the authors use different statistical methods (OLS, fixed effects and system GMM) to analyse the effects of firm-specific and corporate governance influences on capital structure. Findings The authors find that the proportion of independent directors and ownership concentration exert significant influence on the level of Chinese long-term debt ratios after controlling for firm-specific determinants and split share reforms. Further analysis separating the sample of this paper into state-owned enterprises (SOEs) and privately owned enterprises (POEs) suggests that ownership concentration in the hands of the state leads to decrease in debt ratios. Research limitations/implications The finding implies that concentrated ownership in the hands of the state appears more efficient compared to their private counterparts in their monitoring role. Originality/value This paper extends prior literature, which has concentrated disproportionately on firm-specific influences on capital structure, to the effects of within-firm governance mechanisms on capital structure decisions. The paper contributes to the agency theory–capital structure discourse in an emerging country context where corporate governance system appears weak.

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