Corporate governance and capital structure decision: insights from Oman

Figures & data

Figure 1. Proposed framework.

Table

Population	Around 30 Firms listed in MSM 30 Index
Inclusion criteria	Firms belong to financial sector (Banks, Financial Services Companies, etc..) are excluded from the sample selection. Firms from non-financial sector with more than 10% data missing are excluded.
Sample size	19 firms are selected from non-financial sector (banks and financial services firms are excluded). Out of 19 firms, 5 firms suffers from more than 10% data missing and they were excluded. The total sample size based on these criteria is 14 firms.

Table 1. Measurement of variables.

Variables	Symbols	Proxies of variables	Variable type
Debt ratio	LD	Long term debt to total assets	Dependent variable
Debt ratio	S&T_D	Total debt to total assets	Dependent variable
Board independence	INDP	Ratio of independent directors to an aggregate number of directors on the board	Independent variable
Multiple directorship	MDS	Ratio of directors who hold multiple seats to an aggregate number of directors on the board	Independent variable
Board size	BS	Gross number of directors on the board of directors of the firm	Independent variable
Board meeting frequency	BNM	Number of meetings during a year for the board of directors	Independent variable
Profitability	ROA	Net income to total assets	Control variable
Firm size	Fsize	Natural logarithms of total assets	Control variable
Growth of firm	TOBINQ	Ratio of the market value of ordinary shares + total debt, divided by the book value of gross assets of the firm	Control variable
Dividend per share	DIV	Sum of the total amount of dividends divided by the weighted average of shares	Control variable
Sector	Sector	Dummies for the two sectors; service and manufacturing	Control variable

Table 2. Descriptive statistics.

Variable	Mean	Std. dev	Min	Max
L_D	0.1481	0.2017	0	0.741
S&T_D	0.2375	0.2153	−0.027	0.7780
DIV	0.0560	0.0560	0	0.1918
INDP	78.3380	28.6581	0	100
MDS	59.4940	29.8303	0	100
BS	7.5258	1.6143	5	12
BNM	6.5464	2.6615	4	15
ROA	10.5160	8.4608	−4.6694	30.3654
Fsize	3.9803	1.5267	0.7886	6.5101
TOBINQ	1.4192	0.5323	0.2905	3.2584

Table 3. Heteroscedasticity test.

Breusch–Pagan/Cook–Weisberg test for heteroskedasticity
Model 1 (using LD as dependent variable)	Model 2 (using S&T_D as the dependent variable)
chi2(1) = 0.01 Prob > chi2 = 0.9165	chi2(1) = 0.02 Prob > chi2 = 0.8967

Table 4. Multicollinearity test.

Variable	VIF
INDP	1.77
MDS	3.03
BS	3.64
BNM	1.31
ROA	4.9
Fsize	1.73
TOBINQ	3.5
DIV	4.98
sector	2.68
Year
2010	1.91
2011	1.9
2012	2.05
2013	2.02
2014	1.91
2015	1.92
Mean VIF	2.62

Table 5. Endogeneity tests.

Model	Model 1 (using LD as dependent variable)		Model 2 (using S&T_D as dependent variable)
Variables	Coef	p	Coef	p
Durbin (score)chi2(1)	7.8672	0.0050	7.6757	0.0056
Wu–Hausman F(1,49)	6.7473	0.0124	6.5611	0.0136
Sargan (score) chi2(5)	7.4277	0.2831	6.5611	0.4279
Basmann chi2(5)	5.6767	0.4604	3.6712	0.5977

Table 6. Correlation analysis for model 1.

Variables	L_D	DIV	INDP	MDS	BS	BNM	ROA	Fsize	TOBINQ
L_D	1
DIV	−0.2191	1
INDP	0.3201	−0.0179	1
MDS	−0.3417	−0.1142	−0.0885	1
BS	0.6459	0.155	0.2849	−0.7279	1
BNM	−0.1943	−0.1344	0.1256	0.0622	0.0151	1
ROA	−0.3446	0.6072	−0.2452	−0.0955	0.0174	−0.0547	1
Fsize	0.2041	0.3894	−0.1032	−0.3724	0.2917	−0.2381	0.0848	1
TOBINQ	−0.134	0.0758	−0.3318	−0.1169	−0.0015	−0.0499	0.6015	0.1033	1

Table 7. Correlation analysis for model 2.

Variables	S&T_D	DIV	INDP	MDS	BS	BNM	ROA	Fsize	TOBINQ
S&T_D	1
DIV	−0.1032	1
INDP	0.2536	−0.0179	1
MDS	−0.349	−0.1142	−0.0885	1
BS	0.5104	0.155	0.2849	−0.7279	1
BNM	−0.2701	−0.1344	0.1256	0.0622	0.0151	1
ROA	−0.4613	0.6072	−0.2452	−0.0955	0.0174	−0.0547	1
Fsize	0.4836	0.3894	−0.1032	−0.3724	0.2917	−0.2381	0.0848	1
TOBINQ	−0.2339	0.0758	−0.3318	−0.1169	−0.0015	−0.0499	0.6015	0.1033	1

Table 8. OLS regression results.

Model 1: LD	Coef	T	P	Model 2: S & L D	Coef	T	P
INDP	0.00157**	2.38	0.021	INDP	0.00012	0.33	0.741
MDS	0.00163*	1.82	0.074	MDS	−0.00172***	−3.46	0.001
BS	0.0817***	5.22	0.000	BS	−0.0487***	−5.62	0.000
BNM	−0.0337***	−4.04	0.000	BNM	−0.0021	−0.46	0.645
ROA	−0.0055	−1.62	0.111	ROA	−0.00868***	−4.56	0.000
logsal	0.0182	1.51	0.137	logsal	0.035404***	5.26	0.000
TOBINQ	0.052	1.11	0.273	TOBINQ	0.025264	0.96	0.341
DIV	−0.427	−0.82	0.415	DIV	1.087905***	3.77	0.000
sector	Yes			sector	yes
Year	Yes			Year	yes

Notes: *Relationship is significant at the 0.1 level (two-tailed). **Relationship is significant at the 0.05 level (two-tailed). ***Relationship is significant at the 0.1 level (two-tailed).

Table 9. 2SLS regression results.

Model	Model 1: L_D			Model 2: S&T_D
Variables	Coef	T	P	Coef	T	P
DIV	−3.0708**	−2.39	0.017	−2.814	−1.47	0.14
INDP	0.0018**	2.44	0.015	0.002*	2.32	0.02*
MDS	0.0031**	2.49	0.013	0.002	1.27	0.204
BS	0.1041***	4.65	0.002	0.064	2.23	0.026*
BNM	−0.035**	−3.55	0.002	−0.033	−3.07	0.002**
ROA	0.0089	1.21	0.227	0.005	0.47	0.64
Fsize	0.051**	2.87	0.004	0.094*	4.05	0.04*
TOBINQ	−0.099	−1.11	0.268	−0.133	−1.05	0.294
sector	YES			YES
Year	YES			YES
R-squared	0.596			0.56
Constant	−0.39	−1.3	0.19

Notes: *Relationship is significant at the 0.1 level (two-tailed). **Relationship is significant at the 0.05 level (two-tailed). ***Relationship is significant at the 0.1 level (two-tailed).

Data availability statement

The data of this article were extracted from the annual and financial reports which are available on the Muscat Security Market website (https://www.msx.om/). The data is accessible from the website for the audience (open source). There is no privacy concern or restriction to share this data if it is requested.