The impact of corporate governance on capital structutre

• Autor(a) principal: Oulhim, Aziz
• Data de Publicação: 2019
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.1/13725
• topic: Estrutura de capital; Endividamento; Índice de endividamento; Alavancagem; Governança corporativa; Paquistão; Setor não financeiro; Domínio/Área Científica::Ciências Sociais::Outras Ciências Sociais

This study integrates various strands of the literature and examines the impact of corporate governance quality on capital structure. Quantitative research design is used for this empirical study. Sample consists of panel data of the non-financial sector companies listed at Pakistan stock exchange over different periods. The data of the variables of interest are collected from annual reports published by companies and the publications of state bank of Pakistan. The companies are selected by taking a representative sample from the whole non-financial sector. The results reveal that board size is negatively and significantly related to debt ratio in case of Pakistani listed firms operating in non-financial sector. The negative relationship was found between return on asset (ROA) and debt to equity ratio which suggests that Pakistani firms earn higher returns on assets and such firms rely more on internal financing resulting in less use of debt. Liquidity shows a strong negative association with debt to equity. As for firm size a positive and a significant association with debt to equity was observed. The findings of the study suggest that the corporate governance is statistically significant and negatively related to capital structure. This implies that sound corporate governance firms pursue lower leverage to avoid financial risk and dilution of powers. The findings of the study will help the firm managers in achieving an optimal level of capital structure. It also helps the regulatory authorities in making lows and providing institutional support to make corporate governance mechanisms more effective.