Title:
CORPORATE GOVERNANCE ATTRIBUTES AND FIRMS’ CAPITAL STRUCTURE: EVIDENCE FROM LISTED COMPANIES IN SRI LANKA

Authors:
L.G.R.V. De Silva, Sri Lanka

Abstract:

Determining an optimal mix of capital structure is crucial and difficult. Corporate governance will assist in reducing the agency problem and ensure firm success through strict monitoring and proper utilization of firm resources. Thus, firms will eventually have better access to debt and equity at lower cost. This study examines the impact of corporate governance attributes on capital structure of listed non-finance companies in Sri Lanka. The sample of the study consisted of a panel of 50 main board listed companies; which covers all the non-financial sectors of Colombo Stock Exchange for three-year period from 2016 to 2018. Since there is no specific research carried out on examining corporate governance attributes and capital structure on main board listed non finance firms of Sri Lanka; hence this research has made a substantial contribution to the local literature. Multiple regression analysis was employed to analyze the variables. Further this study finds a significant and negative relationship between CEO duality and capital structure. This suggests splitting the key organization roles of CEO and chairmanship will leads to employing less debt in capital structure. This research study finds except for CEO duality, other corporate governance attributes has lesser implications on the capital structure due to companies are currently following the corporate governance code and it will not create a direct background as an impact factor on financing decisions. Further the findings are assisting firms to strengthen their internal corporate governance mechanism.