IDEAS home Printed from https://ideas.repec.org/a/jfr/afr111/v5y2016i1p1.html
   My bibliography  Save this article

The Effects of Board Characteristics and Ownership Structure on the Corporate Financial Leverage

Author

Listed:
  • Mohamed Galal Abobakr
  • Khairy Elgiziry

Abstract

The paper aims to investigate the linkage between some corporate governance mechanism such as board characteristics, ownership structure and corporate financial leverage in an emerging market, Egypt. To achieve the objectives of this study, we use a sample of 36 non-financial firms selected from the more actively traded 50 listed Egyptian firms in the Egyptian Stock Exchange (EGX) covering the period from 2007 to 2011. Measures of corporate financial leverage employed are the total debt ratio, the long-term debt ratio and the short-term debt ratio. The explanatory variables of corporate characteristics are board size, outside non-executive directors, CEO duality, and board female proportion. The measures of ownership structure include managerial ownership, institutional ownership, block holder's ownership and governmental ownership. Similarly, the effect of some control variables like firm size, profitability, growth and tangibility has been also examined. The multiple regression models (OLS) were used to analyze the data. Results show that institutional ownership and governmental ownership are significantly positively related to corporate leverage, whereas board size, board female, and block holding are found to be significantly negatively correlated. Although Egyptian firms still have weak corporate governance mechanisms compared to firms in developing countries, the empirical findings suggest that board characteristics and ownership structure playing an important role in deciding the Egyptian corporate financial leverage.Â

Suggested Citation

  • Mohamed Galal Abobakr & Khairy Elgiziry, 2016. "The Effects of Board Characteristics and Ownership Structure on the Corporate Financial Leverage," Accounting and Finance Research, Sciedu Press, vol. 5(1), pages 1-1, February.
    • Handle: RePEc:jfr:afr111:v:5:y:2016:i:1:p:1
    as

    Download full text from publisher

    File URL: https://www.sciedupress.com/journal/index.php/afr/article/download/8247/5391
    Download Restriction: no
    File URL: https://www.sciedupress.com/journal/index.php/afr/article/view/8247
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anderson, Ronald C. & Mansi, Sattar A. & Reeb, David M., 2004. "Board characteristics, accounting report integrity, and the cost of debt," Journal of Accounting and Economics, Elsevier, vol. 37(3), pages 315-342, September.
    2. Adams, Renée B. & Ferreira, Daniel, 2009. "Women in the boardroom and their impact on governance and performance," Journal of Financial Economics, Elsevier, vol. 94(2), pages 291-309, November.
    3. Qigui Liu & Gary Tian & Xiaoming Wang, 2011. "The effect of ownership structure on leverage decision: new evidence from Chinese listed firms," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 16(2), pages 254-276.
    4. Yu Wen & Kami Rwegasira & Jan Bilderbeek, 2002. "Corporate Governance and Capital Structure Decisions of the Chinese Listed Firms," Corporate Governance: An International Review, Wiley Blackwell, vol. 10(2), pages 75-83, April.
    5. Godfred A. Bokpin & Anastacia C. Arko, 2009. "Ownership structure, corporate governance and capital structure decisions of firms," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 26(4), pages 246-256, October.
    6. Berger, Philip G & Ofek, Eli & Yermack, David L, 1997. "Managerial Entrenchment and Capital Structure Decisions," Journal of Finance, American Finance Association, vol. 52(4), pages 1411-1438, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hassan Ahmad & Nasreen Akhter & Tariq Siddiq & Zahid Iqbal, 2018. "Ownership Structure, Corporate Governance and Capital Structure of Non-Financial Firms of Pakistan," Information Management and Business Review, AMH International, vol. 10(1), pages 31-46.
    2. Ayman Hassan Bazhair, 2023. "Board Governance Mechanisms and Capital Structure of Saudi Non-Financial Listed Firms: A Dynamic Panel Analysis," SAGE Open, , vol. 13(2), pages 21582440231, May.
    3. García, C. José & Herrero, Begoña, 2021. "Female directors, capital structure, and financial distress," Journal of Business Research, Elsevier, vol. 136(C), pages 592-601.
    4. Ali Amin & Ramiz ur Rehman & Rizwan Ali & Ridzwana Mohd Said, 2022. "Corporate Governance and Capital Structure: Moderating Effect of Gender Diversity," SAGE Open, , vol. 12(1), pages 21582440221, March.
    5. ManYing Kang & Marcel Ausloos, 2017. "An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies," Economies, MDPI, vol. 5(4), pages 1-23, November.
    6. Benjamin Ighodalo EHIKIOYA & Alexander Ehimare, OMANKHANLEN & Cordelia Onyinyechi, OMODERO & Ada MAC-OZIGBO, 2021. "Investigating the Impact of Managerial Entrenchment on Corporate Financial Structure: Evidence from Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(7), pages 563-574, July.
    7. Husam Aldamen & Keith Duncan, 2012. "Corporate governance and access to interest bearing debt," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 10(2), pages 140-152, October.
    8. Detthamrong, Umawadee & Chancharat, Nongnit & Vithessonthi, Chaiporn, 2017. "Corporate governance, capital structure and firm performance: Evidence from Thailand," Research in International Business and Finance, Elsevier, vol. 42(C), pages 689-709.
    9. Ramzi Benkraiem & Amal Hamrouni & Anthony Miloudi & Ali Uyar, 2018. "Access to Finance for French Firms: Do boardroom attributes matter?," Economics Bulletin, AccessEcon, vol. 38(3), pages 1267-1278.
    10. Uwuigbe Olubukunola Ranti, 2013. "The Effects of Board Size and CEO Duality on Firms’ Capital Structure: A Study of Selected Listed Firms in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(8), pages 1033-1043, August.
    11. Rupinder Kaur & Balwinder Singh, 2021. "The Impact of CEOs’ Characteristics on Corporate Leverage: Indian Scenario," Vision, , vol. 25(4), pages 428-438, December.
    12. Faisal Seraj Alnori & Ali Mohsen Shaddady, 2019. "Corporate Debt Choice and Board Size: The Case of Oil Exporting Economy," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(5), pages 1-6.
    13. Godfred A. Bokpin & Anastacia C. Arko, 2009. "Ownership structure, corporate governance and capital structure decisions of firms," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 26(4), pages 246-256, October.
    14. Mohammad Nazim Uddin & Mohammed Shamim Uddin Khan & Mosharrof Hosen, 2019. "Does Corporate Governance Influence Leverage Structure in Bangladesh?," IJFS, MDPI, vol. 7(3), pages 1-16, September.
    15. Saleh F.A. Khatib & Dewi Fariha Abdullah & Ali Shariff Kabara & Saddam A. Hazaea & Tamil Selvi Rajoo, 2020. "Does Debts have any Impact on Governance Bundle and Agency Costs? Over-Governance Hypothesis," Technium Social Sciences Journal, Technium Science, vol. 9(1), pages 384-396, July.
    16. ManYing Kang & Marcel Ausloos, 2017. "An Inverse Problem Study: Credit Risk Ratings as a Determinant of Corporate Governance and Capital Structure in Emerging Markets: Evidence from Chinese Listed Companies," Papers 1712.00602, arXiv.org.
    17. Khaled Hussainey & Khaled Aljifri, 2012. "Corporate governance mechanisms and capital structure in UAE," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 13(2), pages 145-160, September.
    18. repec:thr:techub:1009:y:2020:i:1:p:384-396 is not listed on IDEAS
    19. Azhar Abdul Rahman, 2018. "Quality of Information and the Moderating Effect of Board Size on SME Financial Structure: Malaysian Evidence," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 851-859:2.
    20. Nasir Ali & Najeeb Muhammad Nasir & Saqlain Latif Satti, 2014. "The Effect of Corporate Governance on Capital Structure Decisions – A Case of Saudi Arabian Banking Sector," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 10(2), pages 51-60, April.
    21. Arun Upadhyay, 2014. "Social Concentration on Boards, Corporate Information Environment and Cost of Capital," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 41(7-8), pages 974-1001, September.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jfr:afr111:v:5:y:2016:i:1:p:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sciedu Press (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.