Corporate governance and equity finance: an emerging economy perspective

Faizul Haque

Journal of Financial Economic Policy, 2015, vol. 7, issue 3, 233-250

Abstract: Purpose - – This paper aims to investigate whether firm-level corporate governance has an influence on the equity financing patterns in an emerging economy such as Bangladesh. Design/methodology/approach - – The regression framework uses a questionnaire survey-based corporate governance index (CGI) comprising five dimensions – ownership structures, shareholder rights, independence and responsibilities of the board and management, financial reporting and disclosures and responsibility towards stakeholders. In addition, a number of semi-structured interviews have been carried out with the relevant stakeholders. Findings - – The results suggest a statistically significant positive relationship between CGI and equity capital and, thus, confirm the prediction of the agency theory. Research limitations/implications - – This study does not address endogeneity and reverse causality issues with respect to the relationship between CGI and equity finance. Practical implications - – Firms should improve their legal compliance and voluntary activism in corporate governance matters to ensure increased access to equity finance. Originality/value - – This study is among the first to examine the relationship between overall corporate governance quality and equity finance of a firm from the perspective of a bank-based emerging economy.

Keywords: Bangladesh; Agency theory; Corporate finance and governance; Equity finance; G32; G34; G38; O16 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfeppp:v:7:y:2015:i:3:p:233-250

DOI: 10.1108/JFEP-11-2014-0070

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