The moderator role of corporate governance on capital structure-performance nexus: Evidence from Sub-Saharan Africa

Figures & data

Table 1. Variables summary.

Variable	Acronym	Type of variable	Measurement
Return on assets	ROA	Dependent	Earnings after interest and tax divided by total assets
Return on equity	ROE	Dependent	Earnings before interest and tax divided by total equity
Tobin’s Q	TQ	Dependent	((Book value of assets + market value of equity)-book value of equity)/book value of assets))
Short-term leverage	STL	Independent	Short-term debt is divided by total assets.
Long-term leverage	LTL	Independent	Long-term debt divided by total assets
Total leverage	TL	Independent	The ratio of total debt to total assets
Board size	BS	Moderator	Total number of board members in a year
Board gender diversity	BGD	Moderator	The ratio of female board members and board size
Board independence	BI	Moderator	The ratio of non-executive board members and board size
Board meetings	BM	Moderator	The number of board meetings in a year
Institutional ownership	IO	Moderator	Proportion of stock held by institutions
Board ownership	BO	Moderator	Proportion of stocks held by board members
Assets intangibility	AI	Control	Property, plant and equipment
Growth opportunity	GO	Control	Market-to-book ratio
Firm size	FS	Control	Natural logarithm of total assets
Inflation	INF	Control	Consumer price index
Financial development	FD	Control	Domestic credit to private sector development (% GDP)
Economic growth	GDPGR	Control	Gross domestic product growth rate

Source: Author’s elaboration from literature.

Table 2. Descriptive statistics.

Variables	Obs	Mean	Std. dev	Min	Max
Firm performance
ROA	1000	0.603	0.305	0.010	1.707
ROE (%)	1000	0.804	0.352	0.056	13.098
Tobin’s Q	987	2.906	0.550	1.490	5.433
Capital structure
LTL (%)	1000	0.781	0.187	0.110	1.095
STL (%)	1000	0.805	0.205	0.156	1.034
TD (%)	1000	0.534	0.497	0.206	1.076
Corporate governance
BS	889	8.765	2.076	5.075	16.076
BGD (%)	780	0.306	0.4065	0.108	0.865
BM	1000	4.097	1.785	1.000	18
B_IND (%)	997	0.630	0.148	0.214	1
BO (%)	709	0.406	0.266	0.000	0.954
IO (%)	886	0.322	0.213	0.000	0.987
Control variables
FS	1000	6.043	1.223	2.207	11.075
AT	798	0.708	0.178	0.305	1.053
GO	802	0.004	0.064	−2	0.503
FD	904	0.342	0.407	0.407	0.876
GDPGR	991	0.543	0.307	−0.543	1.043
INF	901	18.065	0.663	0.305	−0.024

Notes: ROA denote return on assets; ROE denote return on equity; LTL denotes long-term leverage; STL denotes short-term leverage; BS denotes board size; BGD denotes board gender diversity; B_IND denotes board independence; BM denotes frequency of board meetings; BO denotes board ownership; IO denotes institutional ownership; FS denotes firm size; AT denotes assets tangibility; GO denotes growth opportunities; FD denotes financial development; GDPGR denotes Gross domestic product growth rate; INF denotes inflation. Table 1 fully defines all the variables used. Source: Author’s construction.

Table 3. Correlation matrix.

Var	ROA	ROE	TQ	TL	LTL	STL	BS	B_IND	BGD	BM	IO	BO	FD	GDPGR	INF	FS	AT	GO
ROA	1
ROE	0.543*	1
TQ	0.231	0.043	1
TL	−0.01*	−0.10*	0.03*	1
LTL	−0.21*	0.001	0.21*	0.42*	1
STL	0.003	−0.23*	0.301*	0.52*	0.42*	1
BS	0.211	0.031	0.432*	−0.054	−0.021	0.004	1
B_IND	0.06*	0.043	0.019	−0.006	0.20*	0.05	0.231*	1
BGD	0.032*	−0.034	0.03*	−0.005	0.021	−0.043	0.003	0.120	1
BM	0.034	0.043	0.003	−0.09	0.043	0.007	0.054	0.087	0.032	1
IO	0.023	0.002	0.078	0.054	0.032	0.065	0.120	0.064	0.087	0.202	1
BO	0.056	0.007	0.084	0.021	0.043	0.007	0.091	−0.003	0.010	−0.108	0.013*	1
FD	0.213*	0.032	0.007	0.094	0.265*	0.085	0.061	0.043	0.065	0.076	0.070	0.090	1
GDPGR	0.342*	0.208	0.107	0.006	0.086	0.004	0.031	−0.086	−0.45*	0.432*	−0.006	−0.054	0.001	1
INF	0.021	−0.076	0.275*	0.065	0.109	0.041	0.064	0.432*	0.321*	0.906	0.125	0.076	0.038	0.054	1
FS	0.054	0.054	0.134	0.061	0.107	0.342*	0.007	0.050	0.321*	0.185	0.316*	0.015	0.003	−0.287*	0.149	1
AT	0.086	0.175	0.085	0.208*	0.087	0.207	0.065	0.341*	0.176	0.078	0.043	0.208*	0.109	0.344*	0.043	0.002	1
GO	0.065	0.002	0.050	0.216*	0.019	−0.065	0.066	0.055	0.051	0.043	0.052	0.001	−0.05	0.053	0.245*	0.050	0.108	1

Note: *denotes a 5% significance level. ROA denotes return on assets; ROE denotes return on equity; TQ denotes Tobin’s Q; LTL denotes long-term leverage; STL denotes short-term leverage; BS denotes board size; BGD denotes board gender diversity; B_IND denotes board independence; BM denotes the frequency of board meetings; BO denotes board ownership; IO denotes institutional ownership; FS denotes firm size; AT denotes assets tangibility; GO denotes growth opportunities; FD denotes financial development; GDPGR denotes Gross domestic product growth rate; INF denotes inflation. Table 1 fully defines all the variables used. Source: Author’s construction.

Table 4. SGMM results for capital structure and firm performance.

	ROA		ROE		TOBIN’S Q
Variable	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6
L.1	0.024*** (0.004)	0.035*** (0.009)	0.245*** (0.024)	0.035*** (0.006)	0.541* (0.214)	0.354*** (0.080)
Capital structure variables
Short-term leverage	−0.054*** (0.004)	0.025 (0.120)	0.251 (0.354)	−0.035*** (0.008)	0.054 (0.324)	−0.254*** (0.041)
Long-term leverage	0.651 (0.684)	−0.065 (0.354)	0.356*** (0.110)	0.211** (0.093)	0.254 (0.321)	0.245 (0.111)
Total leverage	−0.024*** (0.002)	−0.241*** (0.021)	−0.342*** (0.042)	−0.354*** (0.142)	0.432 (0.345)	−0.384*** (0.120)
Control variables
Firm size
Asset tangibility		0. 254*** (0.024)		0.025*** (0.004)		0.254 (0.147)
Growth opportunities		0.341*** (0.020)		0.341** (0.120)		0.412 (0.471)
Inflation		−0.214 (0.241)		0.102** (0.021)		0.214 (0.341)
Financial development		0.521** (0.241)		0.214 (0.200)		0.432 (0.321)
GDPGR		0.051 (0.224)		0.231** (0.062)		0.432 (0.381)
Time dummies	Yes	Yes	Yes	Yes	Yes	Yes
Hansen	0.654	0.876	0.765	0.564	0.556	0.876
AR (2)	0.541	0.441	0.643	0.543	0.753	0.341

Notes: Robust standard errors are in parentheses, ***, ** and * denote 1, 5 and 10 per cent significant levels, respectively. The insignificant Hansen test values of models 1–6 indicate the absence of overriding identity. Source: Author’s construction.

Table 5. The moderator role of CG mechanism in the CS-FP nexus.

	ROA		ROE		TOBIN’S Q
Variable	Model 7	Model 8	Model 9	Model 10	Model 11	Model 12
L.1	0.214*** (0.021)	0.321*** (0.06)	0.021*** (0.002)	0.205** (0.091)	0.305 (0.410)	0.305 (0.254)
BS	0.364 (0.452)	−0.264 (0.432)	0.405*** (0.154)	0.056 (0.076)	−0.034 (0.098)	−0.254 (0.376)
B_IND	0.241*** (0.025)	0.204*** (0.020)	0.410*** (0.054)	0.350*** (0.140)	0.410 (0.321)	0.054 (0.041)
BGD	−0.241 (0.100)	0.354*** (0.054)	0.421*** (0.196)	0.302** (0.103)	0.206*** (0.032)	0.415 (0.241)
BM	−0.214 (0.351)	0.601 (0.341)	1.351 (1.035)	0.262 (0.351)	0.308*** (0.024)	0.305* (0.140)
IO	0.054 (0.031)	0.354 (0.214)	0.045 (0.032)	0.465*** (0.021)	0.307** (0.106)	0.209** (0.043)
BO	0.0307 (0.021)	0.405** (0.107)	0.025*** (0.003)	0.235*** (0.050)	0.020 (0.035)	0.035 (0.024)
TL	−0.241 (0.035)	−0.241*** (0.030)	−0.041 (0.245)	−0.024*** (0.003)	−0.201*** (0.035)	−0.325*** (0.054)
BS*TL	0.054 (0.029)	0.354 (0.254)	−0.214*** (0.025)	0.044 (0.987)	0.035 (0.097)	0.006 (0.014)
B_IND*TL	0.054*** (0.006)	0.145*** (0.024)	0.154*** (0.050)	0.025 (0.354)	0.242 (0.164)	0.208*** (0.035)
BGD*TL	0.687 (0.872)	−0.548 (0.687)	0.098 (0.784)	0.287*** (0.025)	0.058 (0.364)	0.087*** (0.009)
BM*LTL	0.284*** (0.065)	0.254** (0.084)	0.241 (0.205)	0.087** (0.020)	0.054 (0.897)	0.087 (0.587)
IO*TL	0.097 (0.058)	0.548** (0.158)	−0.205 (0.108)	0.065 (0.254)	0.087 (0.065)	0.214*** (0.036)
BO*TL	0.068*** (0.009)	0.187*** (0.035)	0.068 (0.074)	0.365 (0.287)	0.342 (0.298)	0.065*** (0.007)
FS		0.054 (0.098)		−0.191 (0.159)		0.245** (0.045)
AT		0.543*** (0.154)		1.9468 (7.22)		0.643*** (0.231)
GO		0.564*** (0.206)		0.246** (0.078)		2.404 (3.790)
INF		−0.307*** (0.031)		−0.509 (0.700)		0.043 (0.021)
FD		0.349*** (0.065)		0.654 (0.409)		−0.251 (0.115)
GDPGR		0.608 (0.642)		0.407** (0.132)		0.054*** (0.005)
Time dummies	Yes	Yes	Yes	Yes	Yes	Yes
Hansen	0.654	0.254	0.602	0.703	0.321	0.432
AR (1)	0.342	0.430	0.568	0.106	0.543	0.412
AR (2)	0.576	0.667	0.801	0.431	0.765	0.543

Note: *, ** and *** denote 10%, 5% and 1% significance levels. Robust standard errors are in parentheses.ROA denote return on assets; ROE denotes return on equity; TQ denotes Tobin’s Q; LTL denotes long-term leverage; STL denotes short-term leverage; BS denotes board size; BGD denotes board gender diversity; B_IND denotes board independence; BM denotes the frequency of board meetings; BO denotes board ownership; IO denotes institutional ownership; FS denotes firm size; AT denotes assets tangibility; GO denotes growth opportunities; FD denotes financial development; GDPGR denotes Gross domestic product growth rate; INF denotes inflation. Table 1 fully defines all the variables used. Source: Author’s construction.

Table 6. Additional analysis relating to H1 and H2 for lagged structure and fixed effects estimators.

	ROA		ROE		TOBIN’S Q
Variables	Model 13	Model 14	Model 15	Model 16	Model 17	Model 18
L.1	0.214*** (0.021)	0.321*** (0.06)	0.025*** (0.006)	0.205** (0.091)	0.305 (0.410)	0.054*** (0.006)
BS		0.230 (0.107)		0.654** (0.387)		0.543 (0.342)
B_IND		0.218**** (0.031)		0.345** (0.102)		9.594*** (3.098)
BGD		0.025*** (0.002)		0.207 (0.321)		14.777 (14.077)
BM		2.370 (2.440)		0.454** (0.125)		−1.400 (1.385)
IO		0.145 (0.245)	.	0.254*** (0.035)		0.0001 (0.160)
BO		−1.219 (1.183)		0.035*** (0.003)		0.940 (0.784)
STL	−0.354*** (0.025)		−0.248 (0.314)		−0.713 (.555)
LTL	0.035 (0.122)		0.014 (0.061)		0.564 (0.670)
TL	0.040 (0.075)	−0.184 (0.192)	0.354* (0.145)	2.347 (0.156)	0.064 (0.152)	0.453* (0.113)
BS*TL		−0.273 (0.785)		−0.668 (0.789)		−0.086 (0.359)
B_IND*TL		0.204*** (0.014)		0.510 (0.907)		0.265*** (0.007)
BGD*TL		0.579 (0.710)		0.246 (0.109)		1.072 (0.469)
BM*LTL		0.273 (0.785)		0.342** (0.032)	−2.417 (2.734)	0.025 (0.587)
IO*TL		0..277 (0.451)		0.298 (0.419)	−.502 (.939)	0.121 (0.249)
BO*TL		0.745 (0.554)		0.325 (0.639)	3.022 (2.00)	0.648 (0.207)
FS	−0.089 (0.328)	−0.229 (0.200)	−3.095** (1.408)	−0.191 (0.159)	12.911 (22.089)	0.358*** (0.035)
AT	0.119 (0.031)	−6.811 (7.187)	0.354 (0.125)	1.9468 (7.22)	−35.873** (21.22)	2.404 (3.790)
GO	0.035 (0.004)	0.208*** (0.045)	0.405* (0.147)	0.547*** (0.154)	(-1.564)	0.713 (0.555)
INF	−0.350*** (0.036)	0.003 (0.563)	0.024 (0.095)	−0.324 (0.060)	0.034 (0.180)	−0.564 (-0.670)
FD	0.032*** (0.009)	0.307*** (0.023)	0.342*** (0.024)	0.432** (0.100)	0.035 (0.528)	0.453** (0.106)
GDPGR	0.354 (0.148)	0.043 (0.769)	0.065 (0.044)	0.548** (0.141)	0.432 (0.705)	0.056 (0.022)
Constant		0.407*** (0.100)		0.317*** (0.090)		−0.548 (0.254)
Time dummies	Yes	Yes	Yes	Yes	Yes	Yes
Hansen	0.453		0.362		0.178
AR (2)	0.543		0.453		0.207
AR (2)	0.165		0.376		0.378
Adjusted R-squared		0.578		0.654		0.387
p-Value		0.000		0.000		0.000

Note: *, ** and *** denote 10%, 5% and 1% significance levels. Robust standard errors are in parentheses. ROA denote return on assets; ROE denotes return on equity; TQ denotes Tobin’s Q; LTL denotes long-term leverage; STL denotes short-term leverage; BS denotes board size; BGD denotes board gender diversity; B_IND denotes board independence; BM denotes the frequency of board meetings; BO denotes board ownership; IO denotes institutional ownership; FS denotes firm size; AT denotes assets tangibility; GO denotes growth opportunities; FD denotes financial development; GDPGR denotes Gross domestic product growth rate; INF denotes inflation. Table 1 fully defines all the variables used. Source: Author’s construction.

Data availability statement

The data and materials supporting this work can be accessed at: 10.6084/m9.figshare.24316291.