Keyword

Capital structure, corporate governance, family-owned companies, debt financing, and leverage

Abstract

The purpose of paper is to examine the corporate governance attributes that will influence the capital structure of the Malaysian family-owned company. More specifically, this study divides into two objectives which are to examine the relationship between corporate governance and capital structure of the Malaysian family-owned company and to examine whether corporate governance has a significant impact on the capital structure of the Malaysian family-owned company. This study will establish whether capital structure is determined by the various corporate governance attributes, namely board of director size, board of director composition, board of director financial expertise, Chief Executive Officer (CEO) duality role, and Chief Executive Officer (CEO) tenure. This paper employed the family-owned company listed in main market of Bursa Malaysia and yet, the selection of listed family-owned companies based on the prior literature. The sample of 195 companies has met the characteristic of family-owned companies and the study covers three years observations which are 2009, 2010, and 2011 collected from annual report as data for non financial attributes The general findings show that there is a significant negative relationship between board composition and debt ratio, long-term debt ratio and short-term debt ratio which indicates that high proportion of board composition is associated with lower debt ratio and long-term debt ratio which is there is low dependent on debt financing and CEO tenure and capital structure also has significant relationship, but only with long-term debt ratio. This suggests the longer tenure will lower the dependent on the debt financing.


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