The Effects of Corporate Governance Attributes on Capital Structure and Firm Value of Listed Companies in Colombo Stock Exchange

Abstract

This study examines the effects of corporate governance attributes on capital structure and firm value among non-financial companies listed on the Colombo Stock Exchange. Specifically, it investigates how board size, board composition, managerial ownership, board meetings, CEO tenure, and CEO duality influence debt levels and firm value. Most prior research in the Sri Lankan context typically evaluates the effects of corporate governance on either capital structure or firm value in isolation but this study integrates both dimensions, offering a more comprehensive perspective. Using a sample of 90 firms over a period of eight years from 2013 to 2020, the study employs regression analysis to identify significant Received: 25/09/2024 relationships. The findings reveal that larger board sizes and frequent Revised: 21/12/2024 Accepted: 05/01/2025 board meetings are associated with higher debt levels, while diverse board Published: 12/06/2025 composition correlates with lower long-term debt. Regarding firm value, larger boards and fewer board meetings are associated with higher firm value. These results highlight the critical role of corporate governance in determining capital structure and optimizing firm value, offering practical insights for policymakers and business leaders on enhancing governance frameworks to achieve better financial outcomes.