The impact of State Affiliated Directors on the capital structure speed of adjustment in an emerging makret

Hussain, H. I.; Abidin, I. S. Z.; Kamarulzaman, R.; Shawtari, F. A.

doi:10.17512/pjms.2018.18.1.11

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Tytuł artykułu

The impact of State Affiliated Directors on the capital structure speed of adjustment in an emerging makret

Autorzy

Hussain H. I. , Abidin I. S. Z. , Kamarulzaman R. , Shawtari F. A.

Treść / Zawartość

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DOI

10.17512/pjms.2018.18.1.11

Warianty tytułu

Wpływ państwowych dyrektorów stowarzyszonych (SAD) na prędkość dostosowania struktury kapitałowej na rynkach rozwijających się

Języki publikacji

Abstrakty

This study analyses a unique aspect of the speed of adjustment to optimal debt levels in an emerging market by accounting for the impact of State Affiliated Directors (SAD) on internal governance mechanisms. The paper is motivated based view where firms adjust to reach an optimal level of debt ratio as well as the agency problem arising from the separation of ownership and control leading to conflicting interests between managers and shareholders in order to maximize firm value, which could ultimately impede shareholders wealth maximization. Furthermore, the potential for conflict between controlling and minority shareholders are also captured in the appointment of directors linked to the state. The authors, therefore, evaluate the presence of state affiliated directors and their potential to compromise board independence, which may lead to sub-optimal financing decisions. Analyzing firms below target levels, the study finds that the presence of SAD allows firms below target levels to adjust at more rapid rates given the potential for favorable treatment while obtaining credit financing from financial institutions. Contrastingly, the findings, however, show that firms which exceed target leverage levels tend to adjust at more rapid rates in the absence of SAD on boards. The study results point towards the reluctance of these firms to raise financing in equity markets given the possible dilution of ownership of controlling shareholders as well as the reluctance to reduce debt levels. The findings are consistent regardless of measuring debt based on book or market values and across randomized measures of board composition implying that the presence of SAD alters the dynamics of the cost of capital and thus managerial financing decisions.

Badanie to analizuje unikalny aspekt szybkości dostosowywania się do optymalnych poziomów zadłużenia na wschodzącym rynku poprzez uwzględnienie wpływu państwowych dyrektorów stowarzyszonych (SAD) na mechanizmy wewnętrznego zarządzania. Artykuł przedstawia obraz, w którym firmy dostosowują się do osiągnięcia optymalnego poziomu wskaźnika zadłużenia, jak również problem agencji wynikający z oddzielenia własności i kontroli prowadzącej do sprzecznych interesów pomiędzy menedżerami i akcjonariuszami w celu zmaksymalizowania wartości firmy, co może ostatecznie zahamować maksymalizację bogactwa akcjonariuszy. Ponadto przy powoływaniu dyrektorów powiązanych z państwem również brany pod uwagę jest potencjał konfliktu między akcjonariuszami kontrolującymi a akcjonariuszami mniejszościowymi. Autorzy oceniają zatem obecność państwowych dyrektorów stowarzyszonych i ich potencjał zagrażający niezależności rady, co może prowadzić do nieoptymalnych decyzji finansowych. Badanie wykazało, że obecność SAD pozwala firmom poniżej poziomów docelowych na szybsze dostosowanie, biorąc pod uwagę możliwość uprzywilejowanego traktowania przy uzyskiwaniu finansowania kredytowego od instytucji finansowych. Kontrastująco, wyniki pokazują również, że firmy, które przekraczają docelowe poziomy dźwigni, mają tendencję do szybszego dostosowywania się w przypadku braku SAD w zarządach. Wyniki badania wskazują na niechęć tych firm do pozyskania finansowania na rynkach akcji, biorąc pod uwagę potencjalne osłabienie własności akcjonariuszy kontrolujących oraz niechęć do obniżania poziomu zadłużenia. Ustalenia są spójne, niezależnie od pomiaru zadłużenia w oparciu o wartości księgowe lub rynkowe oraz poprzez losowe miary składu zarządu, co oznacza, że obecność SAD zmienia dynamikę kosztu kapitału, a tym samym decyzji finansowych dotyczących zarządzania.

Słowa kluczowe

capital structure speed of adjustment state affiliated directors board composition board independence randomized tests

struktura kapitału szybkość dostosowań zależni dyrektorzy państwowi skład zarządu niezależność zarządu testy losowe

Wydawca

Czestochowa University of Technology

Czasopismo

Polish Journal of Management Studies

Rocznik

2018

Tom

Vol. 18, No. 1

Strony

133--148

Opis fizyczny

Bibliogr. 80 poz., tab.

Twórcy

autor

Hussain H. I.

hafezali.iqbalhussain@taylors.edu.my

Taylor’s Business School, Taylor’s University; Universiti Kuala Lumpur

autor

Abidin I. S. Z.

irwanshah@uum.edu.my

School of Economcis, Finance and Banking, Universiti Utara Malaysia

autor

Kamarulzaman R.

rashidah@ucts.edu.my

University College of Technology Sarawak

autor

Shawtari F. A.

fekri.shawtari@ccq.edu.qa

Community College of Qatar, Doha, Qatar

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Uwagi

Opracowanie rekordu w ramach umowy 509/P-DUN/2018 ze środków MNiSW przeznaczonych na działalność upowszechniającą naukę (2018).

Typ dokumentu

Bibliografia

Identyfikator YADDA

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