Corporate governance and investment decisions: The mediating role of capital structure

Date
2021-05
Authors
Awuah, Nana Ohemah Somah
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Abstract
The principal purpose of this study is to investigate the mediating role of capital structure on the connection between corporate governance and investment decisions. Eighteen Ghanaian firms were selected as a sample for this research using purposive sampling. Three multiple regression models and panel regression were used in this research paper to establish if capital structure mediates the relationship between corporate governance and investment decisions in Ghana. The first regression model investigates the direct connection between corporate governance and investment decisions. The second regression model investigates the relationship between corporate governance and capital structure. Finally, the third regression model examines the indirect relationship between corporate governance and investment decisions using capital structure as the mediating variable. Investment decisions are measured by growth in total assets, capital structure is measured by debt ratio, and corporate governance is measured by board size and board independence. The study results show that for all eighteen companies, there is a positive relationship between corporate governance and investing decisions, corporate governance and capital structure, and capital structure mediating the connection between corporate governance and investment decisions. Preliminary conclusions drawn in the existing literature on the connection between corporate governance and firm performance have been built on by this study but narrow the subject of ‘performance’ down by emphasizing investment decisions. Keywords: Investment Decisions, Mediation, Capital Structure, Corporate Governance, Multiple Regression,
Description
Undergraduate thesis submitted to the Department of Business Administration, Ashesi University, in partial fulfillment of Bachelor of Science degree in Business Administration, May 2021
Keywords
corporate governance policies, regression models
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