Impact of Corporate Governance and Ownership Structure on Capital Structure

This study explores the relationship between corporate governance and ownership structure and capital structure of all non-financial firms listed in KSE 100 index, Pakistan. The time period is of 6 years from 2008 to 2013. The effect of corporate governance and ownership structure variables like board size, non-executive directors, average board meeting attendance, CEO/Chair duality, remuneration structure and managerial ownership and control variables like, return on assets (ROA) and firm size on leverage (Debt/Equity) has been observed using multivariate regression analysis under fixed effect approach. Results show that board size, NED, CEO/Chair duality, Remuneration Structure and ROA have negative impact on Debt/Equity ratio. However leverage is not found significantly influenced by Board size, NED and CEO/Chair duality. Board meeting attendance, managerial ownership and firm size have positive effect on leverage. Relationship of managerial ownership and leverage is not significant. Also, relationship between firm size and leverage is not significant. Significant variables are average board meetings attendance, remuneration structure and ROA, while board size, NED, CEO/Chair duality, managerial ownership and firm size are insignificant variables. Therefore results advocate that corporate governance variables like average board meeting attendance, Remuneration structure and Return on assets play essential role to determine of financial blend of the firms.