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Corporate board reform and capital structure dynamics: evidence from UK

Author

Listed:
  • Ernest Ezeani

    (Heriot-Watt University)

  • Samuel Fulgence

    (De Montfort University
    Leeds Beckett University)

  • Wansu Hu

    (De Montfort University)

  • Frank Kwabi

    (De Montfort University)

  • Chizindu Wonu

    (De Montfort University)

Abstract

Theoretical arguments suggest that corporate board reform will influence firms’ capital structure choices. Consistent with this argument, we examine the impact of corporate board reform on the capital structure dynamics of UK firms. Using 12,384 firm-year observations between 2006 and 2020, we provide evidence of a higher speed of adjustment after board reform. Using an additional analysis, we find that firms with higher agency costs (in the pre-reform phase) are more likely to implement the monitoring effect of debt. Also, our decomposition analysis shows that firms increased both short-term and long-term debt after the board reform, suggesting that improved board monitoring positively impacts firm leverage.Query Our results are robust to alternative leverage proxies and batteries of robustness tests.

Suggested Citation

  • Ernest Ezeani & Samuel Fulgence & Wansu Hu & Frank Kwabi & Chizindu Wonu, 2025. "Corporate board reform and capital structure dynamics: evidence from UK," Review of Quantitative Finance and Accounting, Springer, vol. 65(3), pages 973-1003, October.
    • Handle: RePEc:kap:rqfnac:v:65:y:2025:i:3:d:10.1007_s11156-024-01365-2
    DOI: 10.1007/s11156-024-01365-2
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