Theoretical Examination of The Influence of Corporate Governance on Capital Structure.

Abstract

The main aim of this study is to analyze how corporate governance impacts the capital structures of non-banking enterprises in Pakistan. The sample for this study comprises thirty significant Pakistani firms that either have a presence on the Karachi Stock Exchange (KSE) or have their headquarters located there. Through the application of ordinary least squares regression, we determined the specific relationship between corporate governance characteristics and the financial composition of the business. While Pakistani companies' corporate governance systems may not be considered highly innovative, the research indicates that they do have a certain level of influence on company structure. There appears to be a significant negative relationship between the debt ratio and the following factors: board of director composition, CEO dual function, ownership concentration, profitability, and available data. This relationship has statistical significance. Therefore, it is evident that a decrease in the debt ratio might occur as a consequence of an increase in any of these factors. The debt ratio is positively correlated with the size of the business, tangibility of assets, and director remuneration. It is important to highlight the positive and statistically significant relationship between the debt ratio and board size. However, it is important to note that there is no statistically significant association between the debt ratio and board size.