Impact of Corporate Governance on Capital Structure - A Study of KSE Listed Firms

Global Management Journal for Academic & Corporate Studies, Vol. 3, No. 1, 94-110

13 Pages Posted: 18 Jan 2014

See all articles by Maryam Masnoon

Maryam Masnoon

Bahria University Karachi Campus

Monazza Rauf

Bahria University

Date Written: December 1, 2013

Abstract

The aim of this research is to analyze the impact of corporate governance on capital structure of Pakistani firms. Study sample of this research consists of 30 renowned companies that are based or operational in Pakistan and listed in KSE. We used ordinary least square method of regression to determine the relationship between corporate governance attributes and capital structure of organizations. The analysis shows that although the corporate governance structure of Pakistani companies is not very well developed, but it definitely has a strong impact on the organizational structure of companies to some extent. The results achieved, suggest that board composition, CEO duality, ownership concentration, and profitability are negatively related to debt ratio and is statistically significant. This shows that if we increase any of these variables, a decrease in the debt ratio can be expected. Board size shows positive as well as significant relationship with the debt ratio; while director remuneration and Tangibility of assets and size shows positive, but insignificant relationship with the debt ratio.

Keywords: corporate governance, capital structure, debt ratio, non financial sector, Karachi stock exchange

Suggested Citation

Masnoon, Maryam and Rauf, Monazza, Impact of Corporate Governance on Capital Structure - A Study of KSE Listed Firms (December 1, 2013). Global Management Journal for Academic & Corporate Studies, Vol. 3, No. 1, 94-110. Available at SSRN: https://ssrn.com/abstract=2380056

Maryam Masnoon (Contact Author)

Bahria University Karachi Campus ( email )

National Stadium Road
Karachi
Pakistan

Monazza Rauf

Bahria University ( email )

Pakistan

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