Corporate governance practices and capital structure decisions: the moderating effect of gender diversity

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This study examines the moderating role of gender diversity on the relationship between corporate governance and capital structure. Employing a positivist paradigm, the study adopts a deductive approach for hypothesis testing and model estimation. Panel data from companies listed on the Ghana Stock Exchange over 12 years is analysed using the generalized method of moments (GMM) estimation technique, along with descriptive statistics. The results reveal several important relationships. Firstly, a positive association is observed between board size and capital structure, suggesting that firms with larger boards tend to have higher levels of debt financing. This finding highlights the significance of diverse board composition in terms of perspectives and expertise, which enhances monitoring and decision-making processes, ultimately influencing capital structure choices. Secondly, board independence is found to be positively correlated with capital structure. The presence of independent directors, who prioritize shareholders' interests and mitigate agency conflicts, is associated with higher levels of capital structure. This underscores the importance of effective corporate governance mechanisms and oversight in shaping a firm's financing decisions. Furthermore, the study demonstrates a positive relationship between audit committee size and capital structure. Firms with larger audit committees exhibit a higher capital structure, indicating a preference for increased debt financing. The diverse expertise and perspectives within larger audit committees enhance monitoring, transparency, and accountability, leading to improved financial outcomes and potentially lower borrowing costs. Additionally, gender diversity within both the board and audit committee is found to have a moderating effect on the relationship between corporate governance factors and capital structure. Gender-diverse boards and audit committees bring unique viewpoints, experiences, and networks, thereby enhancing decision-making processes, monitoring capabilities, and transparency. This diversity strengthens corporate governance practices and positively influences capital structure decisions.
A thesis submitted to the department of accounting & finance, kwame nkrumah university of science and technology, kumasi in partial fulfilment of the requirements for the award degree of masters of science accounting & finance