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Corporate Governance and Capital Structure: Evidence from Sustainable Institutional Ownership
- Title
- Corporate Governance and Capital Structure: Evidence from Sustainable Institutional Ownership
- Authors
- Choi, Paul Moon Sub; Choi, Joung Hwa; Chung, Chune Young; An, Yun Joo
- Ewha Authors
- 최문섭
- SCOPUS Author ID
- 최문섭
- Issue Date
- 2020
- Journal Title
- SUSTAINABILITY
- ISSN
- 2071-1050
- Citation
- SUSTAINABILITY vol. 12, no. 10
- Keywords
- capital structure; sustainable corporate governance; institutional investor; monitoring
- Publisher
- MDPI
- Indexed
- SCIE; SSCI; SCOPUS
- Document Type
- Article
- Abstract
- Because corporate sustainability enhances corporate governance principles, firms are increasing their efforts to provide transparency and public disclosure. These efforts inform the public about the relationship between corporate governance and sustainability. Well-informed shareholders know about this relationship, which is becoming more apparent over time. In this study, we empirically examined the possible bilateral relationships between institutional ownership and a firm's capital structure. Methodologically, we used an instrumental variable approach and the two-step generalized method of moments. The implications of this study are two-fold. First, we found that a firm's debt level was low if its institutional ownership level was high. Institutional monitoring may substitute for external debt monitoring, leading firms to employ low leverage. Second, we found that the level of institutional ownership was high if a firm's debt level was high. This association suggests that institutional investors prefer high-leveraged firms because institutional owners decrease their monitoring costs through debt monitoring. In the long run, sustainable institutional ownership materially impacts the capital structures of firms.
- DOI
- 10.3390/su12104190
- Appears in Collections:
- 경영대학 > 경영학전공 > Journal papers
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