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2011),"Testing trade-off and pecking order models of capital structure: does legal system matter?", Managerial Finance, Vol. 37 Iss 8 pp. 715 -735 Permanent link to this document: http://dx.If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -This paper aims to examine the link between financing patterns, information asymmetry and legal traditions in 37 countries during the 1990-2004 period. Design/methodology/approach -The analysis is based on three theories: the trade-off theory, pecking order hypothesis and market timing hypothesis. The authors test the predictions of these theories/hypotheses using regression analysis. The econometric method used is panel data with firm and country fixed effects. The authors develop a modified pecking order model which controls for short-and long-term debt level changes and simultaneously test the predictions of all theories. Findings -Consistent with studies for US firms, the results show that firms across all countries adjust toward the target leverage, but with significantly different rate. The long-term debt contribution in the rate of adjustment is 64 percent in common law countries and 51 percent in civil law countries. The ability of the model to explain changes in leverage ratios is higher in common law countries. The authors find support for market timing hypothesis but no support for pecking order of financing. These results support their conjecture that stronger investor protection, higher transparency and well-developed financial markets in common law countries reduce the cost of recapitalization.Research limitations/implications -The limitation of this study comes from lack of data availability to measure contract enforcement, transparency, and corporate governance variables. Future research can incorporate these variables to explain the differences in capital structure decisions across countries with different legal systems. Practical implications -The findings show that firms' capital structure decisions are not only a function of their own characteristics but also the result of legal and financial market development in which they operate. Originality/value -This is the first study that sheds light about rate of adjustment to optimal capital structure and pecking order...

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Purpose This study aims to compare the impact of board characteristics on the performance of listed non-financial firms to the impact of board characteristics on the performance of listed financial firms (commercial banks) in Ghana. Design/methodology/approach The fixed and random effects models with generalized least square specifications are used in estimating regressions to correct for heteroscedasticity and serial correlation. Additionally, this study uses lagged models of the board variables to address the possibility of the presence of endogeneity and to generate robust estimates. Findings The empirical results show some similarities and differences on the impact of board characteristics on the performance of listed non-financial firms and banks. On similarities, for both non-financial firms and banks, board size is seen to have a significant non-linear impact on Tobin’s q. Also, the proportion of foreign board members shows a positively significant relationship with firm performance for both listed non-financial firms and banks. The effect of the proportion of board members with higher educational qualifications on firm performance appears to be negative and statistically significant for both sample of firms. On the other hand, the impact of board composition and board gender diversity on firm performance differs from listed banks and non-financial firms. Research limitations/implications The panel regressions for the listed banks were run on 63 observations because of the small sample size for the listed banks. Though enough for estimation purposes, inferences from results should be made with caution. Originality/value This paper, unlike most corporate governance – firm performance studies, focuses not only on listed non-financial firms but also on listed banks. From a multi-theoretical perspective, this paper provides a comparative analysis on the impact of board characteristics on financial performance of listed non-financial firms and banks.