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This chapter focuses on testing optimal capital structure theory: The role of intervening variable debt to equity ratio (DER) on the influence of the financial performance, Ownership Structure of Independent Board of Commissioners (IBCO), Audit Committee (ACO), and Institutional Ownership on Firm Value. The research design was explanatory research using path analysis. Using purposive sampling, 61 manufacturing companies, observation period from 2014 to 2018 with 286 N samples. The research novelty empirically can prove the role of intervening variable DER on the effect of return on assets (ROA) on firm value and shows the market response to the ROA is fully reflected by DER, indicating the existence of an optimal capital structure. The role of DER on the effect of ROE and IBCO on firm value is a partial mediation with the inverse direction. This phenomenon shows that the mechanism of forming a balance between the responses of investors and creditors relates to debt financing.

This paper aims to investigate the impact of the largest shareholder's voting stake on the firm's capital structure decision.

To empirically analyze the influence of the voting stake on leverage, a large sample of 814 exchange-listed firms is applied. The baseline regression analysis is complemented by several robustness tests and a difference-in-difference regression analysis to mitigate endogeneity concerns.

The authors find a negative relationship between the voting stake of the largest shareholder and leverage, consistent with the notion that large, undiversified shareholders have the incentive to reduce risk. Additionally, results reveal that family control has a positive moderating effect, indicating that the negative relationship is less pronounced for family controlled firms.

The authors contribute to the research by suggesting ownership concentration as another determinant of capital structure. Further, the authors add to the literature by showing how the association between ownership concentration and leverage is moderated by family control and that the identity of the largest shareholder is of great importance.

The paper provides important insights to the current debate on the proposal of the European Commission to reintroduce shares with multiple votes as part of the Listing Act. The authors expect the regulation to exacerbate the concentration of voting rights, which results in lower leverage and thus limits corporate growth.

The authors differentiate from previous studies by focusing the largest shareholders' voting stake, instead of using the ownership stake, to assess the impact of ownership concentration on leverage.

This paper aims to empirically investigate the moderating role of corporate governance (CG) in the capital structure-performance relationship.

The analysis is based on top Business Today-500 companies and covers a time span of 10 years. The fixed effect panel regression model is used to examine the impact of CG mechanisms on the relationship between capital structure and firm performance.

The core findings of the study indicate significant positive moderating role of board independence, board size and family ownership on the relationship between leverage and performance.

The results enable the managers of Indian firms to comprehend the significance of CG framework while taking financing decisions. The findings encourage managers to raise debt funds in those firms that adhere to good governance norms.

Unlike extant studies that emphasize on the moderating impact of single CG variable in leverage-performance relationship, the current work comprehensively examines the role of many CG factors that moderate the relationship between capital structure and firm performance. To the best of the authors’ knowledge, the present study is the first of its kind with respect to India.

This study aims to examine the impacts of board chairman characteristics on the decision to finance with debts.

Based on historical data from 173 active nonfinancial firms listed on Gulf Cooperation Council (GCC) Stock Exchange Markets during 2012–2019, this research uses ordinary least squares (OLS) and dynamic system-generalized methods of moments to test its hypotheses. The final dataset comprises 1,384 firm-year observations from 10 major nonfinancial industry classifications.

Results indicate a negative impact of board chairman ownership on the decision to finance with retained earnings (RE). Negative effects of the chairman and chief executive officer (CEO) from the same family on the decision to finance with RE, whereas positive effects of the chairman and CEO from the same family on the decision to finance with debts are observed. In addition, a negative effect of the chairman from a royal family on the decision to invest with debts is found.

Many board chairmen characteristics, such as age, gender, experience, education level, periodic change and ethnicity, are unaddressed. Financial decisions (FDs) are also limited to two decisions (internal financing with RE and external financing with debts).

Findings of this study provide an improved understanding of the role of chairman characteristics in FDs in GCC. Investors and lenders dealing with companies in GCC markets benefit from the authors' results because of the effects of chairman characteristics on FDs when making investment decisions in company stocks.

The study clarifies how each of the three board chairman characteristics (i.e. chairman ownership, chairman and CEO from the same family and the chairman from the royal family) affects FDs, especially the decisions to finance with debts and RE.

This paper aims to analyze the effect of family control and influence dimension of the socioemotional wealth (SEW) on capital structure of large listed firms in the North African region.

The study uses panel data of the top 98 largest listed firms in the North African capital markets over the period from 2018 to 2022. The analysis is conducted employing random effects models.

Findings suggest that large listed firms in North African region rely on more use of equity rather than debt financing. Further, results show that family control and influence dimension of the SEW, has no significant impact on the capital structure of North African large listed firms. This implies that the financing behavior of large firms listed in the North African countries is driven by financial and rationale factors rather than non-economic considerations. Indeed, findings support assumptions of the pecking order theory.

This transnational study provides new insights into relevancy of socioemotional theory in explaining capital structure decisions within large family businesses in emerging markets. Findings have the potential to enhance analysts', investors' and practitioners' understanding of financing decisions by large listed firms in this region. This, in turn, can aid in conceiving adapted financing solutions.

The aim of this study is to measure the risk disclosure level and to determine the relationship between ownership structure dimensions (institutional ownership, foreign ownership and family ownership) and corporate risk disclosure in Jordan.

This study used a sample of 94 Jordanian listed firms from the Amman Stock Exchange for the period from 2014 to 2017. This study measured risk disclosure using the number of risk-related sentences in the annual report, while random effects regression was used for hypotheses testing.

The results revealed that family ownership has a negative effect on risk disclosure practices, but institutional ownership, foreign ownership, firm size and leverage have no significant effect on the risk disclosure level.

The finding of this study is more likely be useful for many concerned parties, researchers, authorities, investors and financial analysts alike in understanding the current practices of the risk disclosure in Jordan, thus helping them in reconsidering and reviewing the accounting standards and improving the credibility and transparency of the financial reports in the Jordanian capital market.

This study offers novel evidence detailing the impact of ownership structure toward corporate risk disclosure, its implementation in emerging markets following the minimal amount of scholarly efforts on the topic. To the best of the authors’ knowledge, this is the first examination of the impact of ownership structure on corporate risk disclosure. Thus, this study has important implications for the decisions of executives, policymakers, shareholders and lenders, as it enables them to better understand the linkage between ownership structure on corporate risk disclosure.

This study aims to investigate how the presence of female executives on the board affects a company’s capital structure decisions. The critical mass of female executives on the board was also considered to observe their impact on capital structure.

Samples were taken from nonfinancial sector companies listed on the Indonesia Stock Exchange between 2012 and 2021 (3,707 firm-year observations). Capital structure was measured using four approaches, namely, debt-to-total asset ratio (DAR), debt-to-equity ratio (DER), short-term debt-to-total assets (STD) and long-term debt-to-total assets (LTD). The data were analyzed using panel data regression analysis, including a fixed effects model with clustered standard errors.

The presence of female executives on the board is significantly negatively related to capital structure as measured by DER and STD. The critical mass of women provided no evidence of a relationship with a firm’s capital structure. Robustness checks were performed, and the results were consistent with those in the main analysis.

Female executives can be appointed to management boards when determining a strategy to achieve the capital structure desired by a company.

This study increases the diversity of research in corporate governance by synthesizing various indicators from female executives into a single study to determine their relationships with companies’ capital structures. In addition, this study stands out by incorporating four distinct indicators for assessing capital structure and diverging from the norm observed in many other studies, many of which rely on just two indicators: DAR and DER. Moreover, it strongly emphasizes the unique economic, legal, social and cultural landscapes of developing countries like Indonesia in comparison to their developed counterparts, particularly Western nations.

This study aims to examine the effects of market liquidity on earnings management (EM) of seasoned equity offering (SEO) firms considering external capital access.

This study uses a panel data set of 158 Vietnamese SEO firms from 2007 to 2019. Both real and accrual EM measures are analysed. The study uses two proxies for market liquidity: stock turnover (the ratio of total shares traded over the year divided by total shares outstanding for the year) and high–low spread (estimated following Corwin and Schultz [2012]) and fixed-effects panel and two-stage least squares regression in the analysis.

Firms with high (low) market liquidity report low (high) EM, and the result is robust after controlling for endogeneity. The results hold for both real and accrual-based EM for both market liquidity proxies. However, the results are robust only for firms with low external capital access and non-state-owned companies. The authors find a negative market reaction to earnings manipulation.

This study’s findings help policymakers, investors and managers make better decisions regarding SEO firms and reduce the risk of inaccurate information due to EM.

Among the few studies that test the influence of market liquidity on EM, to the best of the authors’ knowledge, this study is the first to examine the effect of market liquidity on EM in the context of SEO firms considering the impact of capital access.

This study aims to examine the contribution of audit committee effectiveness (ACE), internal audit function (IAF) and firm-specific attributes to internet financial reporting (IFR). It also seeks to understand which ACE and IAF attributes contribute to variances in IFR.

Data are collected through a questionnaire survey of 40 financial services firms.

The analysis shows that ACE and IAF significantly contribute to positive variances in IFR. It also shows that among the firm-specific attributes, only capital structure significantly contributes to positive variances in IFR. Audit committee meetings and authority contribute significantly to positive variances in IFR unlike audit committee expertise and independence. In terms of the IAF attributes, the risk management role and the regulatory compliance role contribute significantly to positive variances in IFR as compared to the governance processes role and evaluation of the internal control role.

This study enhances our understanding of the relationship between ACE, IAF, firm-specific attributes and IFR in an environment where IFR is not mandated and where corporate governance practices are very much in infancy. This is especially so given that for the first time, to the best of the authors’ knowledge, the contribution made by ACE, IAF and firm-specific attributes in IFR using evidence from an African developing country (Uganda) is now documented in a single study.

This study aims to examine the determinants of Sukuk credit ratings of issuing firms in Malaysia, and the rating changes from lower to higher rating and vice versa.

A total of 328 Sukuk issuances and 1,110 Sukuk rating announcements from 2009 to 2014 were analysed using generalized ordered logit regressions approach. Firm financial characteristics, corporate governance attributes, macroeconomic factors and Sukuk structures (debt or equity based) were among the important determinants used to explain the different Sukuk credit ratings.

The results indicate a positive association of Sukuk credit rating with issuing firm’s financial information, governance attributes and the Sukuk structure whilst the macroeconomic factors did not explain the changes in the Sukuk credit rating. Specifically, firm size, profitability and leverage characteristics had significant positive effect on Sukuk credit rating for listed firms whilst only firm’s profitability had a positive effect on Sukuk credit rating by unlisted firms. With regard to governance, the board structure which includes board size, board independence and CEO/Chairman non-duality is associated with positive Sukuk credit rating for listed firms. Only financial report audited by big four auditors is associated with positive Sukuk credit rating for unlisted firms. Equity-based Sukuk are associated with positive Sukuk credit rating for listed firms while for unlisted firms only the Ijarah Sukuk had a positive Sukuk credit rating.

Data on credit rating is scarce and had to be hand-collected from published reports. Furthermore, issues on the lack of standardisation of Islamic contracts in different geographical areas could constrain on the comparability of findings on determinants of ratings in different jurisdictions.

The findings provide some guide to the rating agencies to objectively assess the issuer’s creditworthiness that could mitigate default risk. Mitigating the default risk will boost investors’ confidence and credibility of credit rating agencies.

This study examines the determinants of Sukuk credit rating of issuing firms in Malaysia, which include not only the listed firms but also the unlisted firms.