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Ownership structure, corporate governance and capital structure decisions of firms

Author

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  • Godfred A. Bokpin
  • Anastacia C. Arko

Abstract

Purpose - The purpose of this paper is to examine the effect of ownership structure and corporate governance on capital structure decisions of firms on the Ghana Stock Exchange (GSE). Design/methodology/approach - To analyze the impact of ownership structure and corporate governance on firms' financing decisions, unbalanced panel data covering a period from 2002 to 2007 is employed using the seemingly unrelated regression approach to mitigate the effects of multicollinearity among the regressors. Findings - The regression results reveal that managerial shareholding significantly positively influences the choice of long‐term debt over equity. Among the corporate governance variables, board size is found to be positively and statistically significantly related to capital structure choices. Firm level factors such as volatility in earnings, asset tangibility, dividend payout ratio and profitability are significant determinants of corporate capital structure decisions on the GSE. The findings are largely consistent with theories of capital structure decisions observed in the literature. Originality/value - The main value of this paper is to provide a comprehensive understanding of the impact of forms of ownership and other governance practices on capital structure decisions of firms from an emerging market perspective.

Suggested Citation

  • Godfred A. Bokpin & Anastacia C. Arko, 2009. "Ownership structure, corporate governance and capital structure decisions of firms," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 26(4), pages 246-256, October.
    • Handle: RePEc:eme:sefpps:v:26:y:2009:i:4:p:246-256
    DOI: 10.1108/10867370910995708
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    References listed on IDEAS

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    Cited by:

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    2. Ahmed Arif & Bilal Aslam, 2014. "Determinants of Capital Structure: An Age Wise Analysis from Non-Financial Sector of Pakistan," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 3(2), pages 76-89.
    3. Rupinder Kaur & Balwinder Singh, 2021. "The Impact of CEOs’ Characteristics on Corporate Leverage: Indian Scenario," Vision, , vol. 25(4), pages 428-438, December.
    4. Muhammad Iqbal & Faisal Javed, 2017. "The Moderating Role of Corporate Governance on the Relationship between Capital Structure and Financial Performance: Evidence from Manufacturing Sector of Pakistan," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 6(1), pages 89-105, January.
    5. Demircioğlu, Emre, 2014. "Organization performance and happiness in the context of leadership behavior (case study base on psychological well-beings)," MPRA Paper 61484, University Library of Munich, Germany.
    6. Mohamed Galal Abobakr & Khairy Elgiziry, 2016. "The Effects of Board Characteristics and Ownership Structure on the Corporate Financial Leverage," Accounting and Finance Research, Sciedu Press, vol. 5(1), pages 1-1, February.
    7. repec:abd:kauiea:v:30:y:2017:i:1:p:105-116 is not listed on IDEAS
    8. Azhar Abdul Rahman, 2018. "Quality of Information and the Moderating Effect of Board Size on SME Financial Structure: Malaysian Evidence," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 851-859:2.
    9. Ionescu Alin & Tudoreanu Petru, 2014. "The Impact Of Corporate Governance Dimensions On Financial Structure Of The Companies In Developing Countries," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 23-29, December.
    10. Riaqa Mubeen & Dongping Han & Jaffar Abbas & Iftikhar Hussain, 2020. "The Effects of Market Competition, Capital Structure, and CEO Duality on Firm Performance: A Mediation Analysis by Incorporating the GMM Model Technique," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    11. Omer Bin Thabet & Fekri Ali Shawtari & Abdullah Mohammed Ayedh & Fazlin Ali, 2017. "Capital Structure of Malaysian Shariah-Compliant Firms هيكلية رأس المال الشركات الماليزية المتوافقة مع الشريعة الإسلامية," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 30(1), pages 105-116, January.
    12. Sarah Anobil Okyere & Vera Fiador & Emmanuel Sarpong‐Kumankoma, 2021. "Earnings management, capital structure, and the role of corporate governance: Evidence from sub‐Saharan Africa," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(6), pages 1525-1538, September.
    13. Mazlina Mustapha Author_Email: mazlina05@gmail.com & Hashanah Bt Ismail & Badriyah Bt Minai, 2011. "Determinants Of Debt Structure: Empirical Evidence From Malaysia," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-490, Conference Master Resources.
    14. Zeitun, Rami & Goaied, Mohamed, 2021. "The nonlinear effect of foreign ownership on capital structure in Japan: A panel threshold analysis," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    15. Ramzi Benkraiem & Amal Hamrouni & Anthony Miloudi & Ali Uyar, 2018. "Access to Finance for French Firms: Do boardroom attributes matter?," Economics Bulletin, AccessEcon, vol. 38(3), pages 1267-1278.
    16. Mohammad Nazim Uddin & Mohammed Shamim Uddin Khan & Mosharrof Hosen, 2019. "Does Corporate Governance Influence Leverage Structure in Bangladesh?," IJFS, MDPI, vol. 7(3), pages 1-16, September.
    17. Ahmed Sultan Bin-Sariman & Azwadi Ali & Mohd Nazli Mohd Nor, 2016. "Board of directors' quality and firms' debt financing: the moderating effect of insider ownership - evidence from Omani firms," Applied Economics, Taylor & Francis Journals, vol. 48(5), pages 402-410, January.
    18. Hassan Ahmad & Nasreen Akhter & Tariq Siddiq & Zahid Iqbal, 2018. "Ownership Structure, Corporate Governance and Capital Structure of Non-Financial Firms of Pakistan," Information Management and Business Review, AMH International, vol. 10(1), pages 31-46.

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