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

Abstract

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Corporate Governance Quality and Capital Structure Decisions: Empirical Evidence from Canada

“…In line with this view, our results suggest that firms with higher governance quality have higher leverage because these firms can borrow at a lower cost. Our results are also consistent with the findings of Sheikh and Wang (2012) and Boateng et al (2017). The former study reports that board size, outside directors, and ownership concentration are positively related to leverage.…”

“…This study contributes to the literature by investigating how corporate governance is related to firms' capital structure decisions. Much of the prior literature on capital structure has focused on firm-specific factors while less attention has been given to the effect of within-firm governance mechanisms on capital structure decisions (Boateng et al, 2017). Therefore, our findings add a new piece to the capital structure puzzle.…”

“…Granado-Peiró and López-Gracia (2017) study how corporate governance (measured by managerial ownership and controlling shareholders ownership) affect capital structure of Spanish listed firms and they report a non-monotonic relationship. Boateng et al (2017) analyse the effects of internal governance mechanisms, including ownership concentration, CEO duality and the percentage of independent directors on capital structure decisions of Chinese listed firms. The authors find that the proportion of independent directors is positively related to the long-term debt ratio while ownership concentration is negatively associated with the long-term debt ratios.…”

“…Therefore, our findings add a new piece to the capital structure puzzle. Moreover, most of prior studies have focused on individual corporate governance mechanisms, including Brailsford et al (2002), Wen et al (2002), Abor (2007), Sheikh and Wang (2012), and Boateng et al (2017), rather than treating governance quality as one index variable. Accordingly, this study measures corporate governance quality using the corporate governance index provided by The Globe and Mail, which includes four elements: board compositions, shareholding and compensation, shareholder rights, and disclosure.…”

Capital Structure and Corporate Governance Mechanisms in Kuwait Stock Exchange (KSE)

“…Empirical studies have produced mixed results (see Table 1). Hypothesis 1 assumes a negative relationship between ownership concentration and capital structure, consistent with agency theory (Jensen & Meckling, 1976;La Porta et al, 1999) and studies by Boateng, Cai, Borgia, and Ngwu (2017), Heng and Azrbaijani (2012), and Uwuigbe (2014). Hypothesis 2 predicts that government ownership concentration affects capital structure in the same way.…”