PurposeThe purpose of this research is to examine the impact of corporate governance proxies by ownership structure on financial constraints for a sample of 215 non-financial Pakistan Stock Exchange (PSX) listed firms between 2010 and 2018.Design/methodology/approachThe dynamic generalized method of moments (GMM) estimator is used to determine the influence of ownership structure on financial constraints. The ownership structure of sample enterprises is measured using seven variables: managerial, family, institutional, foreign, associated, presence of block holder, and concentrated ownership, while financial limitations are determined using the KZ Index. The WW Index is used to assess the robustness of the results. In addition, for robustness, we also used OLS and FE.FindingsBased on the system GMM results, it was discovered that firm ownership structure has a significant impact on the likelihood of financial constraints. In the case of Pakistan, the results show that institutional ownership, foreign ownership, and the presence of a block holder in the ownership structure have a significant negative impact on financial constraints, whereas family ownership and ownership concentration have a significant positive impact. This finding remains true when financial constraints are measured using the WW Index.Practical implicationsThe findings of the study provide business managers and investors with more information regarding the relationship between corporate governance quality and the degree of financial constraint in Pakistani firms. Furthermore, this study contributes new information from emerging nations like Pakistan to the existing literature, which will help regulatory bodies and policymakers build long-term corporate governance solutions to manage financial constraints. It is well established that improving the quality of corporate governance practices improves capital market efficiency and lowers the likelihood of financial constraints.Originality/valueThe study adds to the body of existing work on corporate governance and the possibility of financial constraints, with a focus on Pakistan. The findings show that when projecting company financial constraints, regulators should pay special attention to the quality of corporate governance, specifically ownership structure.

This paper aims to examine whether effective tax rate and firm-specific factors (such as firm size, growth opportunities, tangibility, risk, profitability, non-debt tax shields and liquidity) impact the capital structure of multinational firms in the energy sector. We employ regression models consisting of OLS, fixed effect and random effect to test balanced panel dataset of multinational firms based in the UK and USA over the period 2011–2019. We show a positive and significant effect of tangibility, risk, profitability and non-debt tax shields on long-term and total debt measures of capital structure. In the case of short-term debt, however, we reveal that it is significantly negatively related to tangibility, non-debt tax shields and liquidity, and positively associated with firm risk. Moreover, we report that the effective tax rate and firm size are insignificantly negatively related to the leverage choices of multinational firms, and liquidity has a significant inverse relationship with long-term debt and total debt. This study reveals mixed support for the prevailing capital structure theories and evidence that multinational firms are unequivocally responsive to the capital structure. The results significantly contribute to evaluating multinational firms in the energy sector and show how managers can achieve an optimal level of capital structure.

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