Does board characteristics affect the capital structure decisions of Ghanaian SMEs?
Open Access
- 1 January 2006
- journal article
- Published by Virtus Interpress in Corporate Ownership and Control
- Vol. 4 (1), 113-118
- https://doi.org/10.22495/cocv4i1p9
Abstract
The issue of corporate governance has been a growing area of management research especially among large and listed firms. However, less attention has been paid in the area with respect to Small and Medium Enterprises (SMEs). This current study explores the link between corporate board characteristics the capital structure decision of SMEs. The paper specifically assesses how the adoption of corporate governance structures among Ghanaian SMEs influences their financing decisions by examining the relationship between corporate governance characteristics and capital structure using an appropriate regression model. The results show negative association between capital structure and board size. Positive relationships between capital structure and board composition, board skills, and CEO duality are, however, found. The control variables in the model show signs which are consistent with standard capital structure theories. The results generally suggest that SMEs pursue lower debt policy with larger board size. Interestingly, SMEs with higher percentage of outside directors, highly qualified board members and one-tier board system rather employ more debt. It is clear, from the study, that corporate governance structures influence the financing decisions of Ghanaian SMEs.Keywords
This publication has 19 references indexed in Scilit:
- Corporate governance and financing decisions of Ghanaian listed firmsCorporate Governance: The international journal of business in society, 2007
- Board characteristics, accounting report integrity, and the cost of debtJournal of Accounting and Economics, 2004
- Agency problems and debt financing: leadership structure effectsCorporate Governance: The international journal of business in society, 2004
- Corporate debt policy of small firms: an empirical (re)examinationJournal of Small Business and Enterprise Development, 2003
- Industrial Clusters and SME Promotion in Developing CountriesPublished by Commonwealth Secretariat ,2000
- Managerial Entrenchment and Capital Structure DecisionsThe Journal of Finance, 1997
- Small firm growth, access to capital markets and financial structure: Review of issues and an empirical investigationSmall Business Economics, 1996
- An Empirical Test of the Impact of Managerial Self‐Interest on Corporate Capital StructureThe Journal of Finance, 1988
- The Determinants of Capital Structure ChoiceThe Journal of Finance, 1988
- Separation of Ownership and ControlThe Journal of Law and Economics, 1983