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Corporate governance and equity finance: an emerging economy perspective

Author

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  • Faizul Haque

Abstract

Purpose - – This paper aims to investigate whether firm-level corporate governance has an influence on the equity financing patterns in an emerging economy such as Bangladesh. Design/methodology/approach - – The regression framework uses a questionnaire survey-based corporate governance index (CGI) comprising five dimensions – ownership structures, shareholder rights, independence and responsibilities of the board and management, financial reporting and disclosures and responsibility towards stakeholders. In addition, a number of semi-structured interviews have been carried out with the relevant stakeholders. Findings - – The results suggest a statistically significant positive relationship between CGI and equity capital and, thus, confirm the prediction of the agency theory. Research limitations/implications - – This study does not address endogeneity and reverse causality issues with respect to the relationship between CGI and equity finance. Practical implications - – Firms should improve their legal compliance and voluntary activism in corporate governance matters to ensure increased access to equity finance. Originality/value - – This study is among the first to examine the relationship between overall corporate governance quality and equity finance of a firm from the perspective of a bank-based emerging economy.

Suggested Citation

  • Faizul Haque, 2015. "Corporate governance and equity finance: an emerging economy perspective," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 7(3), pages 233-250, August.
    • Handle: RePEc:eme:jfeppp:v:7:y:2015:i:3:p:233-250
    DOI: 10.1108/JFEP-11-2014-0070
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    Citations

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    Cited by:

    1. Florentina Melnic & Daniel Juravle, 2020. "Governance And Access To Finance," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 25, pages 151-168, June.

    More about this item

    Keywords

    Bangladesh; Agency theory; Corporate finance and governance; Equity finance; G32; G34; G38; O16;
    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
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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