Board of directors, capital structure, investment decisions and firm-performance: An empirical study of Nordic firms

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Abstract

Firms’ financing, boards of directors’ characteristics, investments, and firm-performance (financial and non-financial) occupy a pivotal place in corporate finance and corporate governance literature. The current study explores if causalities between the abovementioned four distinct albeit inter-related phenomena follow any pattern. The data comprising of 1240 firm-years belonging to Finland, Norway, Sweden, and Denmark for the period of 2003 to 2018 have been analyzed by applying multivariate linear regression and principal component analysis. The findings show that the impact of boards of directors’ characteristics is stronger on capital structure, however, weaker on investments and financial performance. The major contribution of the article is creating a set orderly and sequential causalities between financing, boards of directors’ characteristics, investments, and firm-performance.

Keywords: Financing, Investment, Capital Structure, Board of Directors, Firm Performance

Authors’ individual contribution: Conceptualization – S.H.; Methodology – S.H.; Formal Analysis – S.H.; Investigation – S.H.; Resources – S.H. and A.E.; Writing – Original Draft – S.H.; Writing – Review & Editing – S.H. and A.E.; Visualization – S.H.; Project Administration – S.H. and A.E.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G32, G34, M41

Received: 27.06.2020
Accepted: 25.08.2020
Published online: 28.08.2020

How to cite this paper: Hundal, S., & Eskola, A. (2020). Board of directors, capital structure, investment decisions and firm-performance: An empirical study of Nordic firms [Special issue]. Corporate Ownership & Control, 17(4), 377-390. https://doi.org/10.22495/cocv17i4siart14