The impact of corporate governance on financial leverage: evidence from Egypt

This study examines the effect of corporate governance on financial leverage of emerging market firms. This study shows the effects of corporate governance by estimating empirical model in which firms' financial leverage is dependent variable, while board size, blockholder ownership, independent directorship, and duality are independent variables. The study employs the panel dataset of 50 listed non-financial firms in Egypt in the period 2008-2019 and the econometric method for panel data, which is multiple regression model. The study suggests a significant and negative effect of board size and duality on the financial leverage relation. The impact of board independence on the financial leverage inclines to be positive significant, and the effect of blockholder ownership tends to be positive, although it is statistically insignificant. The results are inline with diverse of estimation methods. Overall, the findings are consistent with the view that in a context with weak institutional environment, internal corporate governance mechanisms play a particularly important role in the risk-taking activities of emerging market firms.