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
Date Written: December 1, 2013
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
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