Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership

The Nigerian corporate environment has the potentials for high information asymmetry and less disclosure due to the weak institutional structure and an ineffective market for corporate control. These instances may undermine the monitoring capacity of independent directors in the boardroom. Thus, sig...

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Main Authors: Sani, Abdullahi, Alifiah, Mohd. Norfian
Format: Article
Language:English
Published: College of Economics AAS Surakarta 2021
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Online Access:http://eprints.utm.my/id/eprint/97522/1/MohdNorfian2021_BoardIndependenceandCapitalStructure.pdf
http://eprints.utm.my/id/eprint/97522/
https://jurnal.stie-aas.ac.id/index.php/IJEBAR/article/view/2343
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Institution: Universiti Teknologi Malaysia
Language: English
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spelling my.utm.975222022-10-17T04:19:14Z http://eprints.utm.my/id/eprint/97522/ Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership Sani, Abdullahi Alifiah, Mohd. Norfian HG Finance The Nigerian corporate environment has the potentials for high information asymmetry and less disclosure due to the weak institutional structure and an ineffective market for corporate control. These instances may undermine the monitoring capacity of independent directors in the boardroom. Thus, signifying the need for a complementary corporate governance mechanism to boost investors’ confidence. This research views that institutional investors have the incentives to strengthen board governance, given their sophisticated financial expertise and management skill. Therefore, this paper measures the moderating role of institutional ownership on the relationship between board independence and firms’ capital structure. The study analysed the balanced panel data of 56 Nigerian non-financial listed companies for seven years (2012-2018) using the random effects technique. This study presents evidence that higher levels of institutional ownership strengthen the effect of board independence on the firms’ leverage and vice versa. Hence, the result implies that managers may face stringent monitoring when institutional investors and independent directors interact. Such superior monitoring may compel managers to take on higher leverage to boost firm’ value. Our finding has an important policy implication on enhancing sound corporate governance practices, particularly for firms operating in developing countries where the market for corporate control is ineffective. College of Economics AAS Surakarta 2021-06 Article PeerReviewed application/pdf en http://eprints.utm.my/id/eprint/97522/1/MohdNorfian2021_BoardIndependenceandCapitalStructure.pdf Sani, Abdullahi and Alifiah, Mohd. Norfian (2021) Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership. International Journal of Economics, Business, and Accounting Research (IJEBAR), 5 (2). pp. 38-53. ISSN 2622-4771 https://jurnal.stie-aas.ac.id/index.php/IJEBAR/article/view/2343 NA
institution Universiti Teknologi Malaysia
building UTM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Malaysia
content_source UTM Institutional Repository
url_provider http://eprints.utm.my/
language English
topic HG Finance
spellingShingle HG Finance
Sani, Abdullahi
Alifiah, Mohd. Norfian
Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership
description The Nigerian corporate environment has the potentials for high information asymmetry and less disclosure due to the weak institutional structure and an ineffective market for corporate control. These instances may undermine the monitoring capacity of independent directors in the boardroom. Thus, signifying the need for a complementary corporate governance mechanism to boost investors’ confidence. This research views that institutional investors have the incentives to strengthen board governance, given their sophisticated financial expertise and management skill. Therefore, this paper measures the moderating role of institutional ownership on the relationship between board independence and firms’ capital structure. The study analysed the balanced panel data of 56 Nigerian non-financial listed companies for seven years (2012-2018) using the random effects technique. This study presents evidence that higher levels of institutional ownership strengthen the effect of board independence on the firms’ leverage and vice versa. Hence, the result implies that managers may face stringent monitoring when institutional investors and independent directors interact. Such superior monitoring may compel managers to take on higher leverage to boost firm’ value. Our finding has an important policy implication on enhancing sound corporate governance practices, particularly for firms operating in developing countries where the market for corporate control is ineffective.
format Article
author Sani, Abdullahi
Alifiah, Mohd. Norfian
author_facet Sani, Abdullahi
Alifiah, Mohd. Norfian
author_sort Sani, Abdullahi
title Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership
title_short Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership
title_full Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership
title_fullStr Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership
title_full_unstemmed Board independence and capital structure of Nigerian non-financial listed firms: the moderating role of institutional ownership
title_sort board independence and capital structure of nigerian non-financial listed firms: the moderating role of institutional ownership
publisher College of Economics AAS Surakarta
publishDate 2021
url http://eprints.utm.my/id/eprint/97522/1/MohdNorfian2021_BoardIndependenceandCapitalStructure.pdf
http://eprints.utm.my/id/eprint/97522/
https://jurnal.stie-aas.ac.id/index.php/IJEBAR/article/view/2343
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