mpact of Corporate Governance and Ownership Structure on firms’ Leverage. An empirical study on Saudi non-financial listed firms.

Abstract

Although corporate governance and the ownership structure of firms are the most important factors that impact capital structure decisions, the majority of studies focus on the association of corporate governance and ownership structure on a firm’s performance. Moreover, the majority of these studies cover developed countries. Although the developing countries are not advanced in their application of corporate governance, there is a need to understand the incentives and the factors that affect such markets. This study examined how corporate governance and ownership structure impact on a firm’s level of leverage among Saudi non- financial listed firms from 2014 to 2017. The corporate governance variables chosen for the study were board size and independent directors, the ownership structure variables were managerial, government and institutional ownership. The results suggest the board size is negatively associated with capital structure while the independent directors is positively correlated, however, both of these results are statistically insignificant. While the ownership structures variables show significant negative relationships with the level of leverage.