THE EFFECT OF CORPORATE GOVERNANCE CHARACTERISTICS ON CAPITAL STRUCTURE. ANALYSIS ON EUROPEAN COMPANIES

Anca-Simona Hromei
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Anca-Simona Hromei: Doctoral School of Economics and Business Administration, ”Alexandru Ioan Cuza” University of Iași, Romania

SEA - Practical Application of Science, 2021, issue 26, 67-73

Abstract: The structure of capital and its adequacy to obtain the best results, with a cost of indebtedness as low as possible is an intensely analyzed and debated topic in the literature, numerous theories being elaborated on it. The essence of corporate governance encompasses systems and processes introduced in order to lead and control the company, pursuing performance and creating value for all stakeholders, all these taking into account the best financing solutions and an optimal capital structure. This paper aims to present the effect that corporate governance has on the capital structure of companies. The study was conducted on listed companies from Italy, France and Germany, being used financial and non-financial data from the period 2010-2019. For variables describing corporate governance were analyzed the CEO Duality and the size of the board of directors, while for describing the capital structure, the debt-to-assets ratio was used. It was found that the size of the board positively and directly affects the financial leverage.

Keywords: Financial leverage; Capital structure; Corporate governance, CEO Duality, Board size (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:cmj:seapas:y:2021:i:25:p:67-73

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