Revisiting the capital‐structure puzzle: UK evidence

Al‐Najjar, Basil; Hussainey, Khaled

doi:10.1108/15265941111158505

Cited by 72 publications

(57 citation statements)

References 27 publications

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“…To compare with previous studies, the internal corporate governance variable represented in the institutional investors only has a statistically significant correlation with capital structure decisions in UAE firms (Hussainey, K. and Al-Najjar, B. , 2011b). The institutional investors has statistically insignificant correlation with short term debt finance indicating that Egyptian firms rely more on short term debt finance due to instability of economy growth resulting in the shortage of funds.…”

Section: Resultsmentioning

confidence: 96%

“…Early research by Miller and Modigliani, (1958) is the primary research to look at the relevance of capital structure decisions in an efficient capital market. Not only that but also to investigate the determinants of capital structure decisions (Al-Najjar, B. and Hussainey, K., 2011b). The substance of executing corporate governance practices is significant for the growth of any company and the development to any economy.…”

Section: Introductionmentioning

confidence: 99%

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Corporate Governance Practices and Firm’s Capital Structure Decisions: An Empirical Evidence of An Emerging Economy

Hafez¹

2017

AFR

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There is a growing body of literature that recognises the importance of corporate governance practices on capital structure decisions. However, results are not consistent and only a few studies have been able to draw on any systematic research trying to quantify the relation between corporate governance practices and capital structure decisions and to acquire bits of knowledge of such relation of listed firms in Emerging Economies. Because of the fact that impact use of the corporate governance rules can have on capital structure decisions.The main driver of this research is to investigate the sound use of the Egyptian corporate governance practices on capital structure decisions of listed firms in Egypt over the period 2007 to 2016 utilizing a sample of 50 listed firms in EGX 100. Empirical results demonstrate the significant relationship between various inner and outer corporate governance practices and capital structure decisions of listed firms in Egypt. The findings were quantitatively approved through utilizing E-Views programming for examining panel data. Descriptive statistics, Multi-Collinearity test, Hausman test and multiple regression have been utilized to distinguish the major determinates of capital structure decisions and assess whether it has a significant impact on capital structure decisions.

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Section: Resultsmentioning

confidence: 96%

Section: Introductionmentioning

confidence: 99%

Corporate Governance Practices and Firm’s Capital Structure Decisions: An Empirical Evidence of An Emerging Economy

Hafez¹

2017

AFR

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“…As a result, prior research finds that large firms are more likely to finance their activities using debt than smaller firms (Al-Najjar and Hussainey, 2009a and2009b). Finally, prior research found a negative relationship between dividend policy and capital structure.…”

Section: Methodsmentioning

confidence: 98%

Corporate governance mechanisms and capital structure in UAE

Hussainey

Aljifri

2012

Journal of Applied Accounting Research

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Purpose: Our paper aims to contribute to prior research by examining the relation between corporate governance mechanisms and corporate capital structure in one of the emerging economies, United Arab of Emirates (UAE). In particular, we examine the degree to which internal corporate governance mechanisms and an external corporate governance mechanism affect UAE firms' financing decisions.Design/methodology/approach: We use a multiple regression analysis to examine the association between corporate governance and capital structure for a sample of 71 UAE firms listed either in the Dubai financial market or the Abu Dhabi securities market during 2006. Findings:We find that institutional investors have a negative impact on debt-toequity ratio. This result does not support the 'active monitoring hypotheses where institutional investors are expected to exercise their voting rights effectively in order to prevent managers from reducing their 'employment risk' at the expense of the interests of shareholders. We find no significant association between our measures of the other corporate governance mechanisms and debt-to-equity ratio. We also find that dividend policy is negatively associated with debt-to-equity ratio, while firms' size is positively associated with debt-to-equity ratio.Research implications: Our study has policy implications for both the UAE stock market and for other emerging economies.Originality: To the best of our knowledge, there is no study has yet empirically examined the effect of the corporate governance mechanisms on capital structure in UAE or Middle Eastern countries.

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“…Despite the extensive research done in the area of capital structure since Modigliani andMiller in 1958 andever since Myers (1977) published his article on the determinants of corporate borrowing, understanding in the area is still inconclusive (Harris & Raviv, 1991;Gill et al, 2009;Sheikh & Wang, 2011;Al-Najjar & Hussainey, 2011;Gwatidzo & Ramjee, 2012). Empirical work in this area, according to Titman and Wessels (1988), has lagged behind the theoretical research.…”

Section: Notes 1 Introductionmentioning

confidence: 96%