Impact of Value Relevance of Financial Performance Information and Corporate Governance on Capital Structure : Evidence from Egyptian Manufacturing Firms

Abstract

This research empirically investigates the impact of value relevance of financial accounting based performance information, stock valuation and corporate governance on capital structure choice in Egypt listed manufacturing firms. Multiple regression analysis is used to examine the association between leverage level and research independent variables for a sample of 52 Egyptian listed manufacturing firms from 2006-2010. The results show that capital structure choice has a weak-tono relation to firm's performance and corporate governance. Findings show that the value relevance of organizational performance and corporate governance both have insignificant interactive influence on the capital structure. The results shows that profitability and operational performance has a negative insignificant relationship with capital structure, while liquidity and stock valuation has a positive relationship with firm financial leverage, price/earning has significant impact to the capital structure.