Governance Mechanisms and Financial Structure


Corporate  governance  raises  broad  debate  in  the  world  among  researchers and policymakers. In the United Kingdom and the United States, the focus is on the deficiencies of the market system in terms of effective corporate governance. In continental Europe, there is concern that  current  corporate  governance  systems  hinder  innovation  and  growth.  In  Eastern  Europe,  privatization  raises  the  question  of  how  private  firms  should  be  governed.  China  is  experimenting  with  some  forms  of  corporate  governance  that  combine  features  of  the  market  system  with  public  ownership.  Notwithstanding  all  these  debates,  observations   about   the   effects   of   different   corporate   governance   systems  remain  fragmented.  In  the  area  of  corporate  governance,  the  facts have been swept away by judgments.The central question that we seek to address here relates to the main governance mechanisms to be identified for the Tunisian governoratesThis article is organized around the two main parts. In the first part, we will summarize the main previous empirical works that have dealt with  governance  mechanisms  and  the  choice  of  a  financial  structure.  In  the  second  part,  we  will  empirically  validate  these  governance  mechanisms of the twenty-eight firms listed on the Securities Exchange in Tunisia during the period from 2012 to 2016.

In  this  article,  we  referred  to  the  main  previous  works  that  dealt  with governance mechanisms and their effect on the choice of financial structure  of  the  company.  We  have  noticed  that  these  mechanisms  exert both a positive or negative impact on wealth and the creation of added values for firms. We have empirically verified these mechanisms from  a  sample  of  twenty-eight  Tunisian  financial  and  non-financial  firms  during  a  period.  Study  period  from  2012  until  2016  on  annual  frequencies.  We  have  analyzed  statistics  and  found  that  the  majority  of  the  explanatory  variables  of  finance  and  governance  follow  non-linear  laws.  Also,  we  have  that  all  the  explanatory  variables  and  the  endogenous variable have good linear adjustments with respect to the adjustment  lines.  We  studied  the  governance  mechanisms  and  the  choice of the financial structure through a static panel relationship and we  checked  from  the  specification  tests  that  this  panel  specified  with  individual effects. We estimated this relation by the techniques within and GLS. This estimate gives expected and significant results at the risk level of 1%, 5% and 10%. We have distinguished that the individual effects are  random  since  the  Hausman  statistic  is  lower  than  the  chi-square  value at 8 degrees of freedom. The Hausman Arbitration Test validated that  constants  or  special  characters  are  varied  over  time.  Hence,  the  governance mechanisms and the choice of the financial structure will be modified over time and the sample. The limits of research have two origins: the lack of data relating to the various indicators and the lack of  transparency  of  the  local  authorities  regarding  the  presentation  of  the data.


David Paul
Arabian Journal of Business and Management Review
ISSN: 2223-5833
Tel: +325 328 0176