Capital Structure, Ownership Structure and Corporate Performance of Non-financial Listed Firms: Board Structure Elements’ Moderating Role in an Emerging Economy

Abstract

This article investigates the moderating role of board size (BS), board independence (BI) and board gender diversity (BGD) in the relationships among capital structure (CS), ownership structure (OS) and the performance of non-financial listed firms in Ghana. A quantitative approach, using a panel-data design with endogeneity correction via two-step system GMM dynamic modelling, was employed to analyse financial data from 25 non-financial listed firms spanning 2010–2019. Findings indicated that total-debt-to-equity-ratio (TDTER), total-debt-to-assets-ratio (TDTAR), long-term-debt-ratio (LTDR) and financial risk (FR) significantly and negatively impacted FP. Conversely, total-equity-to-assets-ratio (TETAR), short-term-debt-ratio (STDR), cash conversion cycle (CCC), total assets turnover (TAT), tangibility (TANG), sales growth (GROW), firm size (SZ) and firm age (AGE) significantly and positively influenced FP. Bulk-shareholding (BSH) had a significantly positive effect on FP, while individual-shareholding (ISH) did not. BS, BI and BGD moderated/strengthened the relationships among CS, OS and FP. Findings/Results underscore the risk of high borrowing costs for highly-geared firms, advocating for corporate deleveraging, optimal CS and OS and improved governance practices. This study’s framework, though specific to Ghana, can be applied to other emerging economies, as it integrates previously unexplored/uncharted CG metrics of BS, BI and BGD into Agency Theory (AT), extending the theory’s scope, making it more rigorous/robust and generalisable. This theory extension-driven approach offers novel theoretical/conceptual/methodological insights, along with detailed, context-specific, practical/managerial and policy implications. JEL Classification: G10, G32, G34, G38