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The impact of ownership structure and corporate governance on capital structure decisions in the UAE

The impact of ownership structure and corporate governance on capital structure decisions in the UAE This paper investigates how ownership and corporate governance influence the capital structure decisions within an emerging market context, namely the United Arab Emirates (UAE) from 2008 to 2019. We employ panel models as well as the Two Stages Least Squares (2SLS) technique. Our reported results show that board structure has a negative effect on capital structure decisions. We also detect a positive impact of institutional ownership and managerial ownership on capital structure, while government ownership is inversely associated to capital structure. Finally, we report that profitability negatively affects a firm's capital structure. Thus, we argue that the main determinants of capital structure reported in the developed markets literature do hold in the UAE settings. Accordingly, this study contributes to previous studies in the capital structure context and adds to its puzzle by introducing new insights into the capital structure choice in a free tax environment. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

The impact of ownership structure and corporate governance on capital structure decisions in the UAE

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd
ISSN
1740-8008
eISSN
1740-8016
DOI
10.1504/ijaape.2022.123291
Publisher site
See Article on Publisher Site

Abstract

This paper investigates how ownership and corporate governance influence the capital structure decisions within an emerging market context, namely the United Arab Emirates (UAE) from 2008 to 2019. We employ panel models as well as the Two Stages Least Squares (2SLS) technique. Our reported results show that board structure has a negative effect on capital structure decisions. We also detect a positive impact of institutional ownership and managerial ownership on capital structure, while government ownership is inversely associated to capital structure. Finally, we report that profitability negatively affects a firm's capital structure. Thus, we argue that the main determinants of capital structure reported in the developed markets literature do hold in the UAE settings. Accordingly, this study contributes to previous studies in the capital structure context and adds to its puzzle by introducing new insights into the capital structure choice in a free tax environment.

Journal

International Journal of Accounting, Auditing and Performance EvaluationInderscience Publishers

Published: Jan 1, 2022

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