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The Effect Of Corporate Governance Characteristics On Capital Structure. Analysis On European Companies

Author

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  • Anca-Simona HROMEI

    (Doctoral School of Economics and Business Administration, ”Alexandru Ioan Cuza” University of Iași, Romania)

Abstract

The structure of capital and its adequacy to obtain the best results, with a cost of indebtedness as low as possible is an intensely analyzed and debated topic in the literature, numerous theories being elaborated on it. The essence of corporate governance encompasses systems and processes introduced in order to lead and control the company, pursuing performance and creating value for all stakeholders, all these taking into account the best financing solutions and an optimal capital structure. This paper aims to present the effect that corporate governance has on the capital structure of companies. The study was conducted on listed companies from Italy, France and Germany, being used financial and non-financial data from the period 2010-2019. For variables describing corporate governance were analyzed the CEO Duality and the size of the board of directors, while for describing the capital structure, the debt-to-assets ratio was used. It was found that the size of the board positively and directly affects the financial leverage.

Suggested Citation

  • Anca-Simona HROMEI, 2021. "The Effect Of Corporate Governance Characteristics On Capital Structure. Analysis On European Companies," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 26, pages 67-73, September.
    • Handle: RePEc:cmj:seapas:y:2021:i:25:p:67-73
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    More about this item

    Keywords

    Financial leverage; Capital structure; Corporate governance; CEO Duality; Board size;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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