The impact of capital structure and board of directors characteristics on investment decisions and performance of Nordic firms
Hundal, Shab; Sarbassova, Elmira; Staroshvetckii, Nikita (2020)
João Coelho Guedes, Maria
Julkaisun pysyvä osoite on
The phenomenon of firm financing and the board of directors‘ characteristics are two important determinants of investment and performance of firms, ceteris-paribus. The financing of a firm underpins the financial resources of a firm that can be utilized to acquire assets, which are necessary to run it. Similarly, corporate boards of directors provide leadership and guidance to the firms and at the same time participate in the monitoring and control activities. The quality of corporate boards of directors depends on several characteristics including human capital, relational capital, and board diversity, among others. The current study examines whether firm-level capital structure impacts firm-investments and performance. The results show that the financing of firms affects the investments and performance of firms. Similarly, the busyness of directors and board size affect intangible investments negatively, whereas the education of directors affects the same positively. A major theoretical contribution of the current study is that the capital structure has been taken as an explanatory as well as an intermediate variable to examine its effect on firm investments, and performance.