What is it about?

This study examined the underpinning theories of corporate governance and capital structure. This study also determined the degree of compliance with corporate-governance practices in the JSE-listed companies. This study also econometrically examined the role of corporate-governance in determining the capital structure of firms as presented in the generalised method of moments (GMM) results.

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Why is it important?

The governing board provides an oversight role on behalf of the shareholders of the company. The findings of this study recommends that the governing board, along with management, should carefully consider the capital-structure policy of the company with due regard to the risk appetite of the company. This is significant in preventing financial distress in companies. Any financing decisions should be made in adherence to the capital-structure policy.


This article has some significant contributions to the literature. Particularly when one considers that government and its constituencies create legislation and regulatory frameworks which is not adhered to by companies. This study showed the non-compliance by companies to significant catalysts of leverage. This is especially troubling when one considers the depressed South African economic environment. It would be beneficial to company's to acknowledge the role that corporate governance plays in being either catalysts and/or inhibitors of leverage.

Professor Navitha Singh Sewpersadh
University of Cape Town

Read the Original

This page is a summary of: A theoretical and econometric evaluation of corporate governance and capital structure in JSE-listed companies, Corporate Governance, May 2019, Emerald,
DOI: 10.1108/cg-08-2018-0272.
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