576
Views
0
CrossRef citations to date
0
Altmetric
Financial Economics | Research Article

Do board characteristics influence Islamic banks’ capital structure decisions? Empirical evidence from a developing country

ORCID Icon, & ORCID Icon
Article: 2295155 | Received 01 Feb 2023, Accepted 06 Dec 2023, Published online: 17 Jan 2024

References

  • Abor, J., & Biekpe, N. (2006). Does board characteristics affect the capital structure decisions of Ghanaian SMEs? Corporate Ownership and Control, 4(1), 113–118. https://doi.org/10.22495/cocv4i1p9
  • Adusei, M., & Obeng, E. Y. T. (2019). Board gender diversity and the capital structure of microfinance institutions: A global analysis. The Quarterly Review of Economics and Finance, 71, 258–269. https://doi.org/10.1016/j.qref.2018.09.006
  • Agyei, A., & Owusu, A. R. (2014). The effect of ownership structure and corporate governance on capital structure of Ghanaian listed manufacturing companies. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(1), 109–118. https://doi.org/10.6007/IJARAFMS/v4-i1/547
  • Ajili, H., & Bouri, A. (2018). Corporate governance quality of Islamic banks: Measurement and effect on financial performance. International Journal of Islamic and Middle Eastern Finance and Management, 11(3), 470–487. https://doi.org/10.1108/IMEFM-05-2017-0131
  • Al-Faryan, M. A. S., & Alokla, J. (2023). Do publicly listed insurance firms in Saudi Arabia have strong corporate governance? Economies, 11(1), 21. https://doi.org/10.3390/economies11010021
  • Al-Hunnayan, S. H. (2020). The capital structure decisions of Islamic banks in the GCC. Journal of Islamic Accounting and Business Research, 11(4), 745–764. https://doi.org/10.1108/JIABR-02-2017-0026
  • Ali, N., Nasir, N. M., & Satti, S. L. (2014). The effect of corporate governance on capital structure decisions – A case of Saudi Arabian banking sector. Acta Universitatis Danubius, 10(2), 51–60.
  • Al-Malkawi, H. A. N., & Pillai, R. (2018). Analyzing financial performance by integrating conventional governance mechanisms into the GCC Islamic banking framework. Managerial Finance, 44(5), 604–623. https://doi.org/10.1108/MF-05-2017-0200
  • Alves, P., Couto, E. B., & Francisco, P. M. (2015). Board of directors’ composition and capital structure. Research in International Business and Finance, 35, 1–32. https://doi.org/10.1016/j.ribaf.2015.03.005
  • Amihud, Y., & Lev, B. (1981). Risk reduction as a managerial motive for conglomerate mergers. The Bell Journal of Economics, 12(2), 605–617. https://www.scopus.com/inward/record.uri?eid=2-s2.0-84880930707&partnerID=40&md5=6098f7259b2c6cce098495601411c3de https://doi.org/10.2307/3003575
  • Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68(1), 29–51. https://doi.org/10.1016/0304-4076(94)01642-D
  • Baklouti, I. (2020). Is the Sharia supervisory board a friend or an enemy of Islamic banks? Journal of Islamic Marketing, 13(2), 526–541. https://doi.org/10.1108/JIMA-04-2020-0118
  • Balqis, F. A., Muttaqin, S. N. M., Daniyati, W., & Setiawan, S. (2022). Capital structure policy in property, real estate and building construction sector companies: Do women play a role? Indonesian Journal of Economics and Management, 3(1), 204–213. https://doi.org/10.35313/ijem.v3i1.4713
  • Berger, P. G., Ofek, E., & Yermack, D. L. (1997). American Finance Association managerial entrenchment and capital structure decisions. The Journal of Finance, 52(4), 1411–1438. http://www.jstor.org/stable/2329441 https://doi.org/10.1111/j.1540-6261.1997.tb01115.x
  • Boateng, A., Cai, H., Borgia, D., Bi, X., & Ngwu, F. N. (2017). The influence of internal corporate governance mechanisms on capital structure decisions of Chinese listed firms. Review of Accounting and Finance, 16(4), 444–461. https://doi.org/10.1108/RAF-12-2015-0193
  • Bokpin, G. A., & Arko, A. C. (2009). Ownership structure, corporate governance and capital structure decisions of firms: Empirical evidence from Ghana. Studies in Economics and Finance, 26(4), 246–256. https://doi.org/10.1108/10867370910995708
  • Buallay, A. (2019). Corporate governance, Sharia’ah governance and performance: A cross-country comparison in MENA region. International Journal of Islamic and Middle Eastern Finance and Management, 12(2), 216–235. https://doi.org/10.1108/IMEFM-07-2017-0172
  • Bukair, A. A. A. (2019). Factors influencing Islamic banks. Capital Structure in Developing Economies Accounting, 10(1), 2–20. https://doi.org/10.1108/JIABR-02-2014-0008
  • Chakrabarti, A., & Chakrabarti, A. (2019). The capital structure puzzle – Evidence from Indian energy sector. International Journal of Energy Sector Management, 13(1), 2–23. https://doi.org/10.1108/IJESM-03-2018-0001
  • Chen, H. L., & Hsu, W. T. (2009). Family ownership, board independence, and R&D investment. Family Business Review, 22(4), 347–362. https://doi.org/10.1177/0894486509341062
  • Daily, C. M., Dalton, D. R., & Cannella, A. A. J. (2003). Corporate governance: Decades of dialogue and data. The Academy of Management Review, 28(3), 371–382. https://doi.org/10.2307/30040727
  • Detthamrong, U., Chancharat, N., & Vithessonthi, C. (2017). Corporate governance, capital structure and firm performance: Evidence from Thailand. Research in International Business and Finance, 42(July), 689–709. https://doi.org/10.1016/j.ribaf.2017.07.011
  • Dimitropoulos, P. (2014). Capital structure and corporate governance of soccer clubs: European evidence. Management Research Review, 37(7), 658–678. https://doi.org/10.1108/MRR-09-2012-0207
  • Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288–307. https://doi.org/10.1017/CBO9780511817410.022
  • Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. The Journal of Law and Economics, 26(2), 301–325. https://doi.org/10.1086/467037
  • Farag, H., Mallin, C., & Ow-Yong, K. (2018). Corporate governance in Islamic banks: New insights for dual board structure and agency relationships. Journal of International Financial Markets, Institutions and Money, 54, 59–77. https://doi.org/10.1016/j.intfin.2017.08.002
  • Feng, Y., Hassan, A., & Elamer, A. A. (2020). Corporate governance, ownership structure and capital structure: Evidence from Chinese real estate listed companies. International Journal of Accounting & Information Management, 28(4), 759–783. https://doi.org/10.1108/IJAIM-04-2020-0042
  • Fikri, S. M., Yahya, M. H., & Hassan, T. (2017). A review on agency cost of Shariah governance in mutual fund. International Journal of Economics and Financial Issues, 7(1), 530–538. http:%5Cnwww.econjournals.com
  • García, C. J., & Herrero, B. (2021). Female directors, capital structure, and financial distress. Journal of Business Research, 136(August), 592–601. https://doi.org/10.1016/j.jbusres.2021.07.061
  • Ghaleb, B. A. A., Kamardin, H., & Al-Qadasi, A. A. (2020). Internal audit function and real earnings management practices in an emerging market. Meditari Accountancy Research, 28(6), 1209–1230. https://doi.org/10.1108/MEDAR-02-2020-0713
  • Githaiga, P. N. (2020). Human capital, income diversification and bank performance–An empirical study of East African banks. Asian Journal of Accounting Research, 6(1), 95–108. https://doi.org/10.1108/AJAR-06-2020-0041
  • Grossman, S. J., & Hart, O. D. (1982). Corporate financial structure and managerial incentive. In J. McCall (Ed.), In The economics of information uncertainty (pp. 107–110). University of Chicago Press.
  • Guizani, M., & Ajmi, A. N. (2021). The capital structure decision of Islamic and conventional banks: Empirical evidence from Malaysia. Asia-Pacific Journal of Business Administration, 13(2), 216–234. https://doi.org/10.1108/APJBA-06-2020-0218
  • Gujarati, D. N., & Porter, D. C. (2011). Basic econometrics. In Basic economics (5th ed., pp. 68–81). McGraw‐Hill.
  • Hanousek, J., & Shamshur, A. (2011). A stubborn persistence: Is the stability of leverage ratios determined by the stability of the economy? Journal of Corporate Finance, 17(5), 1360–1376. https://doi.org/10.1016/j.jcorpfin.2011.07.004
  • Harford, J., Mansi, S. A., & Maxwell, W. F. (2008). Corporate governance and firm cash holdings in the US. Journal of Financial Economics, 87(3), 535–555. https://doi.org/10.1016/j.jfineco.2007.04.002
  • Hernandez-Nicolas, C. M., Martín-Ugedo, J. F., & Mínguez-Vera, A. (2015). The influence of gender on financial decisions: Evidence from small start-up firms in Spain. E + M Ekonomie a Management, 18(4), 93–107. https://doi.org/10.15240/tul/001/2015-4-007
  • Hoque, H., & Liu, H. (2021). Capital structure of Islamic banks: How different are they from conventional banks? Global Finance Journal, 54, 100634. https://doi.org/10.1016/j.gfj.2021.100634
  • Hussainey, K., & Aljifri, K. (2012). Corporate governance mechanisms and capital structure in UAE. Journal of Applied Accounting Research, 13(2), 145–160. https://doi.org/10.1108/09675421211254849
  • Javaid, A., Nazir, M. S., & Fatima, K. (2021). Impact of corporate governance on capital structure: Mediating role of cost of capital. Journal of Economic and Administrative Sciences. Advance online publication. https://doi.org/10.1108/JEAS-09-2020-0157
  • Jensen, M. C. (1999). Agency cost of free cash flow, corporate finance, and takeovers. SSRN Electronic Journal, 76(2), 323–329. https://doi.org/10.2139/ssrn.99580
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
  • Kennedy, P. (2008). A guide to econometrics (6th ed.). John Wiley & Sons.
  • Khan, S., Bashir, U., & Islam, M. S. (2020). Determinants of capital structure of banks: Evidence from the Kingdom of Saudi Arabia. International Journal of Islamic and Middle Eastern Finance and Management, 14(2), 268–285. https://doi.org/10.1108/IMEFM-04-2019-0135
  • Kochhar, R. (1996). Explaining firm capital structure: The role of agency theory vs. transaction cost economics. Strategic Management Journal, 17(9), 713–728. https://doi.org/10.1002/(SICI)1097-0266(199611)17:9<713::AID-SMJ844>3.0.CO;2-9
  • Le, T. P. V., & Phan, T. B. N. (2017). Capital structure and firm performance: Empirical evidence from a small transition country. Research in International Business and Finance, 42(July), 710–726. https://doi.org/10.1016/j.ribaf.2017.07.012
  • Lin, J. Y., Cai, F., & Zhou, L. (1998). Competition, policy burdens, and state-owned enterprise reform. American Economic Review, 88(2), 422–427.
  • Meutia, I., Aryani, D., & Widyastuti, S. M. (2019). Characteristics of the sharia supervisory board and its relevance to Islamic social reporting at Islamic banks in Indonesia. EKUITAS (Jurnal Ekonomi Dan Keuangan), 3(1), 130–147. https://doi.org/10.24034/j25485024.y2019.v3.i1.4160
  • Mohammed, S. A. S. A.-N., & Muhammed, J. (2017). The relationship between agency theory, stakeholder theory and Shariah supervisory board in Islamic banking: An attempt towards discussion. Humanomics, 33(1), 75–83. https://doi.org/10.1108/H-08-2016-0062
  • Mollah, S., & Zaman, M. (2015). Shari’ah supervision, corporate governance and performance: Conventional vs. Islamic banks. Journal of Banking & Finance, 58, 418–435. https://doi.org/10.1016/j.jbankfin.2015.04.030
  • Moradi, A., & Paulet, E. (2019). The firm-specific determinants of capital structure – An empirical analysis of firms before and during the Euro Crisis. Research in International Business and Finance, 47, 150–161. https://doi.org/10.1016/j.ribaf.2018.07.007
  • Nathan, S., & Ribière, V. (2007). From knowledge to wisdom: The case of corporate governance in Islamic banking. VINE, 37(4), 471–483. https://doi.org/10.1108/03055720710838533
  • Neves, M. E., Serrasqueiro, Z., Dias, A., & Hermano, C. (2020). Capital structure decisions in a period of economic intervention: Empirical evidence of Portuguese companies with panel data. International Journal of Accounting & Information Management, 28(3), 465–495. https://doi.org/10.1108/IJAIM-08-2019-0094
  • Nomran, N. M., Haron, R., & Hassan, R. (2018). Shari’Ah supervisory board characteristics effects on Islamic banks’ performance: Evidence from Malaysia. International Journal of Bank Marketing, 36(2), 290–304. https://doi.org/10.2139/ssrn.3598723
  • Nugraheni, P., & Khasanah, E. N. (2019). Implementation of the AAOIFI index on CSR disclosure in Indonesian Islamic banks. Journal of Financial Reporting and Accounting, 17(3), 365–382. https://doi.org/10.1108/JFRA-02-2018-0013
  • Obid, S. N. S., & Naysary, B. (2014). Toward a comprehensive theoretical framework for Shariah governance in Islamic financial institutions. Journal of Financial Services Marketing, 19(4), 304–318. https://doi.org/10.1057/fsm.2014.26
  • OJK, Statistik Perbankan Syariah, Otoritas Jasa Keuangan, 2023, https://ojk.go.id/id/kanal/perbankan/data-dan-statistik/statistik-perbankan-indonesia/default.aspx
  • Owar, K. M., & Appiah, K. (2022). Female directors and corporate innovation in family firms in India. Do leverage ratios and mandatory CSR expenditure matter? Journal of Global Responsibility, 14(2), 222–240. https://doi.org/10.1108/JGR-05-2022-0047
  • Pfeffer, J., & Salancik, G. R. (2003). The external control of organizations: A resource dependence perspective. Stanford University Press.
  • Quttainah, M. A., Song, L., & Wu, Q. (2013). Do islamic banks employ less earnings management? Journal of International Financial Management & Accounting, 24(3), 203–233. https://doi.org/10.1111/jifm.12011
  • Rahma, A. A. N., & Bukair, A. A. (2015). The influence of the Shariah supervision board on corporate social responsibility disclosure by Islamic Banks of Gulf Co-Operation Council countries. Journal of Management Research, 7(2), 506. https://doi.org/10.5296/jmr.v7i2.6989
  • Ramdani, R., Mai, M. U., & Muflih, M. (2023). The effect characteristics board of directors on the financial performance of sharia commercial banks in Indonesia. Indonesian Journal of Economics and Management, 3(2), 418–438. https://doi.org/10.35313/ijem.v3i2.4873
  • Rehman, M., Rehman, R., & Raoof, A. (2010). Does corporate governance lead to a change in the capital structure? American Journal of Social and Management Sciences, 1(2), 191–195. https://doi.org/10.5251/ajsms.2010.1.2.191.195
  • Safieddine, A. (2009). Islamic financial institutions and corporate governance: New insights for agency theory. Corporate Governance: An International Review, 17(2), 142–158. https://doi.org/10.1111/j.1467-8683.2009.00729.x
  • Samet, M., & Jarboui, A. (2017). Corporate social responsibility and payout decisions. Managerial Finance, 43(9), 982–998. https://doi.org/10.1108/MF-01-2017-0020
  • Sewpersadh, N. S. (2019). A theoretical and econometric evaluation of corporate governance and capital structure in JSE-listed companies. Corporate Governance: The International Journal of Business in Society, 19(5), 1063–1081. https://doi.org/10.1108/CG-08-2018-0272
  • Sheikh, N. A. (2019). Chapter 27 corporate governance and capital structure: Evidence from Pakistan. In Research in corporate and Shari’ah governance in the Muslim world: Theory and practice (pp. 341–353). Leeds: Emerald Publishing Limited. https://doi.org/10.1108/978-1-78973-007-420191035
  • Sheikh, N. A., & Qureshi, M. A. (2017). Determinants of capital structure of Islamic and conventional commercial banks: Evidence from Pakistan. International Journal of Islamic and Middle Eastern Finance and Management, 10(1), 24–41. https://doi.org/10.1108/IMEFM-10-2015-0119
  • Smaoui, H., Salah, I. B., & Diallo, B. (2020). The determinants of capital ratios in Islamic banking. The Quarterly Review of Economics and Finance, 77, 186–194. https://doi.org/10.1016/j.qref.2019.11.002
  • Tadele, H., Roberts, H., & Whiting, R. (2021). Microfinance institutions’ risk and governance in Sub-Saharan Africa. International Journal of Social Economics, 49(3), 449–469. https://doi.org/10.1108/IJSE-10-2020-0719%0A
  • Tarus, D. K., & Ayabei, E. (2016). Board composition and capital structure: Evidence from Kenya. Management Research Review, 39(9), 1056–1079. https://doi.org/10.1108/MRR-01-2015-0019
  • Usman, M., Farooq, M. U., Zhang, J., Makki, M. A. M., & Khan, M. K. (2019). Female directors and the cost of debt: Does gender diversity in the boardroom matter to lenders? Managerial Auditing Journal, 34(4), 374–392. https://doi.org/10.1108/MAJ-04-2018-1863
  • Wassie, F. A. (2020). Impacts of capital structure: Profitability of construction companies in Ethiopia. Journal of Financial Management of Property and Construction, 25(3), 371–386. https://doi.org/10.1108/JFMPC-08-2019-0072
  • Zaid, M. A., Wang, M., T.f. Abuhijleh, S., Issa, A., W.a. Saleh, M., & Ali, F. (2020). Corporate governance practices and capital structure decisions: The moderating effect of gender diversity. Corporate Governance: The International Journal of Business in Society, 20(5), 939–964. https://doi.org/10.1108/CG-11-2019-0343