Ownership structure, corporate governance and capital structure decisions of firms

Godfred A. Bokpin (Department of Finance, University of Ghana Business School, University of Ghana, Legon, Ghana)
Anastacia C. Arko (Department of Finance, University of Ghana Business School, University of Ghana, Legon, Ghana)

Studies in Economics and Finance

ISSN: 1086-7376

Publication date: 2 October 2009

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.

Keywords

Citation

Bokpin, G. and Arko, A. (2009), "Ownership structure, corporate governance and capital structure decisions of firms", Studies in Economics and Finance, Vol. 26 No. 4, pp. 246-256. https://doi.org/10.1108/10867370910995708

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.