Do Board Characteristics Influence Leverage and Debt Maturity? Empirical Evidence from a Transitional Economy

Adja Hamida, Olivier Colot () and Rabah Kechad
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Adja Hamida: Warocqué School of Business and Economics, University of Mons, 17 Place Warocqué, 7000 Mons, Belgium
Olivier Colot: Warocqué School of Business and Economics, University of Mons, 17 Place Warocqué, 7000 Mons, Belgium
Rabah Kechad: Higher School of Commerce, Koléa University Center, Tipaza 42066, Algeria

JRFM, 2025, vol. 18, issue 8, 1-25

Abstract: This study examines the impact of board characteristics on capital structure decisions in the context of a transition economy, focusing on Algeria, where governance institutions are underdeveloped and the financial market remains immature. Using the Generalized Method of Moments (GMM) on a panel dataset of 120 firms over the period 2015 to 2019, we identify a U-shaped relationship between board size and leverage, and an inverted U-shaped relationship between board size and debt maturity. Furthermore, increased nationality diversity on boards is found to significantly reduce debt maturity. These findings highlight the critical role of board composition in shaping corporate financing strategies in transition economies and provide novel insights into corporate governance dynamics in a relatively underexplored institutional context. The results are particularly relevant for national entities such as COSOB and Hawkama El Djazaïr and may guide banking sector practices by promoting the integration of board governance criteria into credit evaluation processes.

Keywords: corporate governance; board of directors; capital structure; leverage; debt maturity; transition economy; Algeria (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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