Journal of Economics and Management Volume 19, No. 2 September, 2023

Influence of Corporate Governance on Capital Structure Adjustments among Nigerian Listed Manufacturing Firms

Jimoh Ibrahim

Department of Accounting, Osun State University, Osogbo, Nigeria

Aderemi Olalere Adebayo

Department of Accounting, Osun State University, Osogbo, Nigeria

Adewumi Zaid Adeyemi

Department of Accounting, Osun State University, Osogbo, Nigeria

Abstract

This study examines the influence of corporate governance on capital structure adjustments of listed manufacturing firms in Nigeria from 2010 to 2019. Five internal corporate governance mechanisms such as board size, board independence, females on board, managerial ownership, and intuitional ownership were regressed on the speed of adjustments. This study employed a correlational research design and a judgemental sampling technique was used to select the sample size of 35 out of 56 listed manufacturing firms.  Data were generated from the annual accounts of selected manufacturing firms. A Generalized Method of Moments (GMM) system was employed in this study. The findings revealed that board size, females on board, and institutional ownership have a positive and significant influence on the speed of adjustments (SOA). In conclusion, the board size, females on board and institutional and managerial ownership serve as a part of major determinants of the speed of adjustments. Adjustment speed towards an optimal capital structure is 82%, which indicates that the faster adjustments, in turn, ease the means of acquiring financing through debt, thereby lowering adjustment costs. The study suggested that corporate managers of manufacturing companies should think about their internal corporate governance mechanisms because these elements are important to policymakers, bankers, other creditors, and equity holders.

Keywords：Corporate Governance, GMM, Speed of Adjustments, Leverage

JEL Classifications：M14, G34

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