Corporate governance and capital structure decision: insights from Oman
AbstractThis study aims to explore the impact of various board composition elements (board size, board meeting frequency, multiple directorships, and board independence) on capital structure decisions within emerging markets, specifically focusing on the Sultanate of Oman. The study employs a sample...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2024-12-01
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| Series: | Cogent Business & Management |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23311975.2023.2297463 |
| _version_ | 1797304989924720640 |
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| author | Abdelbaset Queiri Araby Madbouly Nizar Dwaikat Uvesh Husain |
| author_facet | Abdelbaset Queiri Araby Madbouly Nizar Dwaikat Uvesh Husain |
| author_sort | Abdelbaset Queiri |
| collection | DOAJ |
| description | AbstractThis study aims to explore the impact of various board composition elements (board size, board meeting frequency, multiple directorships, and board independence) on capital structure decisions within emerging markets, specifically focusing on the Sultanate of Oman. The study employs a sample of 14 non-financial firms listed on the MSM30 index over seven years (2009–2015). To address endogeneity between the interrelated variables of dividends and debt ratio, an endogeneity test is performed. Given that the dividend per share is an endogenous variable, the Two-Stage Least Squares (2SLS) method is used for data analysis. The findings of this study indicate positive associations between debt ratio and board size, board independence and multiple directorships but negative association with board meetings frequency. Board independence serves to support the active monitoring hypothesis, and debt acts as a complementary mechanism to mitigate agency issues, larger board size results in introducing more debts in the firm’s capital structure to offset decision making complexities. Furthermore, multiple directorships increase the use of debt ratio as disciplinary mechanism to offset the busyness of board members who have several multiple directorships. However, the frequency of board meetings was found to have a negative association with debt ratio. Our findings are robust to alternative measures of leverage and endogeneity. This study concentrates on a limited set of factors related to board composition. The use of debt as a substitute mechanism suggests that the followed corporate governance practices are relatively weak and may benefit from further reforms. |
| first_indexed | 2024-03-08T00:19:23Z |
| format | Article |
| id | doaj.art-bbee343b73034f8780868177794703a5 |
| institution | Directory Open Access Journal |
| issn | 2331-1975 |
| language | English |
| last_indexed | 2024-03-08T00:19:23Z |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Business & Management |
| spelling | doaj.art-bbee343b73034f8780868177794703a52024-02-16T14:52:25ZengTaylor & Francis GroupCogent Business & Management2331-19752024-12-0111110.1080/23311975.2023.2297463Corporate governance and capital structure decision: insights from OmanAbdelbaset Queiri0Araby Madbouly1Nizar Dwaikat2Uvesh Husain3Management Department, College of Commerce and Business Administration, Dhofar University, Salalah, Sultanate of OmanBusiness and Accounting Department, Muscat College, Muscat, Sultanate of OmanFaculty of Business, Arab Open University – Palestine Branch, Ramallah, PalestineEconomics and Business Studies Department, Mazoon University College, Muscat, Sultanate of OmanAbstractThis study aims to explore the impact of various board composition elements (board size, board meeting frequency, multiple directorships, and board independence) on capital structure decisions within emerging markets, specifically focusing on the Sultanate of Oman. The study employs a sample of 14 non-financial firms listed on the MSM30 index over seven years (2009–2015). To address endogeneity between the interrelated variables of dividends and debt ratio, an endogeneity test is performed. Given that the dividend per share is an endogenous variable, the Two-Stage Least Squares (2SLS) method is used for data analysis. The findings of this study indicate positive associations between debt ratio and board size, board independence and multiple directorships but negative association with board meetings frequency. Board independence serves to support the active monitoring hypothesis, and debt acts as a complementary mechanism to mitigate agency issues, larger board size results in introducing more debts in the firm’s capital structure to offset decision making complexities. Furthermore, multiple directorships increase the use of debt ratio as disciplinary mechanism to offset the busyness of board members who have several multiple directorships. However, the frequency of board meetings was found to have a negative association with debt ratio. Our findings are robust to alternative measures of leverage and endogeneity. This study concentrates on a limited set of factors related to board composition. The use of debt as a substitute mechanism suggests that the followed corporate governance practices are relatively weak and may benefit from further reforms.https://www.tandfonline.com/doi/10.1080/23311975.2023.2297463Board compensationcorporate governancecapital structureSultanate of OmanMSM30Collins Ntim, University of Southampton, United Kingdom of Great Britain and Northern Ireland |
| spellingShingle | Abdelbaset Queiri Araby Madbouly Nizar Dwaikat Uvesh Husain Corporate governance and capital structure decision: insights from Oman Cogent Business & Management Board compensation corporate governance capital structure Sultanate of Oman MSM30 Collins Ntim, University of Southampton, United Kingdom of Great Britain and Northern Ireland |
| title | Corporate governance and capital structure decision: insights from Oman |
| title_full | Corporate governance and capital structure decision: insights from Oman |
| title_fullStr | Corporate governance and capital structure decision: insights from Oman |
| title_full_unstemmed | Corporate governance and capital structure decision: insights from Oman |
| title_short | Corporate governance and capital structure decision: insights from Oman |
| title_sort | corporate governance and capital structure decision insights from oman |
| topic | Board compensation corporate governance capital structure Sultanate of Oman MSM30 Collins Ntim, University of Southampton, United Kingdom of Great Britain and Northern Ireland |
| url | https://www.tandfonline.com/doi/10.1080/23311975.2023.2297463 |
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