Corporate Governance and Capital Structure of Nepalese Listed Firms

This paper analyzes the relationship between some characteristics of the corporate board and the firm's capital structure in Nepalese listed firms using panel data models. The findings provide some preliminary empirical evidence and seem to suggest that stronger corporate governance practices leads to lower financial leverage and lower agency conflicts. However, the empirical results of the relationships are statistically significant only in the case of board composition and CEO tenure. The results are statistically insignificant in the case of the board size and board skill. The results show positive association between the number of executive directors on board and debt level and also suggest that entrenched CEO pursue higher debt policy. The findings indicate that managements of Nepalese firms are employing higher debt level as an expropriation device for minority shareholders rather then a disciplinary measure