The efficiency of corporate governance on capital structure: an empirical study from listed manufacturing firms in Bangladesh

Abstract

The corporate governance factors are highly focused on the era of universal financial crisis and economic downturn led by risks mostly from weak capital structure. Corporate governance helps to assess insights about capital structure. Therefore, the present study intends to examine the efficiency of corporate governance on firm’s capital structure by using the data from Dhaka Stock Exchange (DSE) listed 40 manufacturing firms covering the period of 2013-2017. The empirical results from Pooled OLS regressions intimate that larger board size, larger audit committee size and higher percentage of foreign ownership help a firm to be less levered but higher percentage of director ownership and audit committee independence put the firms to be more levered thus to be riskier. The non-monitoring role of female directors on board is also documented in the results. The study recommends to limit the shares held by the directors to a certain level and to reassess the role of female directors and independent audit committee members in the context of Bangladesh along with active enforcement.