Impact of equity capital structure on the productivity of capital and labour factors: A corporate governance analysis

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Abstract

This study investigates the relationship between capital structure and productivity of Ecuadorian companies, focusing on factors related to financial health, ownership structure, and currency. Two regression models were constructed to analyse performance and productivity using the same panel data from 2021 to 2022. The findings show that the majority of members have a positive impact on both types of productivity, while members’ financial well-being increases employee productivity. Conversely, the results obtained by business owners are negatively associated with goods production, indicating the unique economic situation of Ecuador. The results of the study also indicate the limited explanatory power of the model, indicating the influence of other unobserved factors. This study highlights the importance of business governance in developing sustainable resources and employment, especially in emerging markets such as Ecuador. These findings build on previous research that addresses majority participation (Demsetz & Lehn, 1985) and business governance (Shleifer & Vishny, 1997). This study contributes to the growing literature on corporate governance by providing insights into the interaction between corporate ownership and corporate performance in the Latin American context. Future research should explore other aspects to gain a deeper understanding of the underlying factors in production decisions.

Keywords: Productivity, Capital Structure, Financial Health, Corporate Governance, Ecuadorian Companies

Authors’ individual contribution: Conceptualization — C.E.F.-Q., G.E.H.-C., F.X.C.-W., and J.C.B.-M.; Methodology — C.E.F.-Q.; Software — C.E.F.-Q. and F.X.C.-W.; Validation — G.E.H.-C.; Formal Analysis — C.E.F.-Q., G.E.H.-C., F.X.C.-W., and J.C.B.-M.; Investigation — C.E.F.-Q., G.E.H.-C., F.X.C.-W., and J.C.B.-M.; Resources — C.E.F.-Q.; Data Curation — C.E.F.-Q.; Writing — Original Draft — G.E.H.-C. and J.C.B.-M.; Writing — Review & Editing — C.E.F.-Q., G.E.H.-C., F.X.C.-W., and J.C.B.-M.; Visualization — C.E.F.-Q. and F.X.C.-W.; Supervision — C.E.F.-Q.; Project Administration — C.E.F.-Q.; Funding Acquisition — C.E.F.-Q.

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

JEL Classification: D24, E22, G32, L25, O47

Received: 23.09.2024
Revised: 01.01.2025; 27.06.2025
Accepted: 11.07.2025
Published online: 16.07.2025

How to cite this paper: Freire-Quintero, C. E., Hurtado-Cevallos, G. E., Calle-Wong, F. X., & Bravo-Mero, J. C. (2025). Impact of equity capital structure on the productivity of capital and labour factors: A corporate governance analysis. Journal of Governance & Regulation, 14(3), 31–38. https://doi.org/10.22495/jgrv14i3art3