The Influence of Corporate Governance on Capital Structure

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

Abstract

Corporate governance has become an increasingly important topic in the context of finance and corporate management, being considered as a factor of influence in terms of decisions on resource allocation, management of owners’ value, and in terms of capital structure and funding sources. This research aims to describe the factors that influence the capital structure, being conducted a quantitative study on the impact that the characteristics of corporate governance have on the capital structure of a company and its degree of indebtedness. The study was conducted at European level, by collecting financial data published for the period 2010-2019 by listed and unlisted companies in Germany, France and Italy, countries where the principles of corporate governance have been imposed since over 50 years ago. As variables that describe corporate governance, we analyzed the presence of the CEO in the Board of Directors, the Duality of the CEO, the independence of the members of the Board and the Size of the Board of Directors. The debt-to-equity ratio was used to describe the capital structure. It was found that corporate governance characteristics influence the capital structure and the degree of indebtedness of the companies included in the study.

Presentation