Corporate governance practices and capital structure Author: N.Sivathaasan Discussion Searat Ali Griffith University

What this paper does? Do the corporate governance practices impact the capital structure decision of Australian listed firms positively or negatively? Are firm-specific determinants of leverage in other developed economies portable to Australia? Determinants of capital structure Corporate governance Capital structure Firm specific

Structure of literature 2.1 Research in global markets 2.1.1 International studies on corporate governance quality (CGQ) and leverage 2.1.2. International studies on the determinants of capital structure 2.1.2.1 Single-country analysis on the determinants of capital structure 2.1.2.2 Cross-country analysis on the determinants of capital structure 2.2 Research on corporate governance and leverage in Australia

Research Gaps Corporate governance and capital structure Studies in relation to corporate governance and capital structure yield mixed results even in an international context. The investigation of these concepts in Australia is totally unexplored and has been paid inattention until recently. Particularly, a narrow focus on the concepts of ownership structure, board structure, investment opportunity and leverage has been researched by some of the scholar. Firm-specific characteristics and capital structure a few research reports findings by employing field and non-field research approaches (Akhtar, 2005; Allen, 1991; Chiarella et al., 1991) Suffer from small sample, and sample period.

Contributions First, this study is the first to provide a comprehensive picture  on the impacts of corporate governance practices on capital structure in the Australian framework at two different scenarios.   The second contribution is the development of a framework towards firm-specific determinants to the current literature.

Some of the paper’s strengths Thorough literature review covering studies in and outside Australia. Overall structure of the paper Introduction Literature Research gaps Contributions

Comments/suggestions 1-Introduction 2-Literature review 3-Gap in the literature 4-Contributions 5-Theoretical linkage 6-Motivation of study 7-Terminalogies 8-Referencing and proofreading 9-Proposed idea

Comments/suggestions 1-Introduction

Comments/suggestions Introduction Introduction mentions about corporate governance and capital structure. However, firm specific determinants are not mentioned. You should mention firm-specific determinants of capital structure.

Comments/suggestions 2-Literature review

Comments/suggestions Suggestions for literature review Mixed results in literature There are number of studies examining the relationship between CG and CS. Gap: The results are mixed. Either positive or negative. Most of the studies find……..? (check list) How your study is resolving the issue of mixed findings? Suggestion: Try to figure out why there are mixed results in the literature? Because of country? Because of industries? Because of sample period? Data after GFC? Sample size? Methodology? OLS; RE, FE, GMM. Variable definition? CG; CS?

Comments/suggestions Suggestions for literature review Chronological or thematic order?

My suggestion: Use chronological order in the early phase and then transit to the thematic order in the later phase. Overall, try to be consistent through out the document. What are the most recent findings? How your study can extend the literature?

Comments/suggestions Suggestions for literature review Check list to summarize and criticize When you are summarizing and criticizing any paper, you should be clear what you are looking into. You should have a check list of the items (use excel grid). Idea (RQ and hypothesis etc.) Data (sample and variables etc.) Tool (estimation methods etc.) Your contribution will come from one of the above three IDIOTs (Faff, 2015)

Comments/suggestions Suggestions for literature review Reading complete paper If the article is relevant to your research than read complete article instead of just relying on the abstract. This study is not on leverage but on cost of debt Governance proxy is antitakeover provisions This study is mainly on executive incentives and leverage. If your focus is not on compensation, then you may avoid this study in your literature so that you are not lost in the forest of different ideas

Comments/suggestions Suggestions for literature review Consistency in literature When you discuss literature in international context, you do not pay attention to the proxies of governance, however when you discuss the literature in Australia, you mention the proxies of governance. Better to mention proxies in international context as well. It will help you to better draw the research gap. Is there any study of ownership structure and leverage in U.S.?

Comments/suggestions Suggestions for literature review Structure of the literature Studies on CG and CS outside Australia Studies on CG and CS in Australia Gaps in these studies? 1...2...and so on Studies on firm specific determinants of CS outside Australia Single-country studies multi-country studies Studies on firm specific determinants of CS in Australia Gap in these studies? 1...2... and so on....

Comments/suggestions Suggestions for literature review Structure of the literature Studies on CG and CS outside Australia Studies on CG and CS in Australia Studies on firm specific determinants of CS outside Australia Studies on firm specific determinants of CS in Australia Gap in these studies? Contributions

Suggestions 3-Gap in the literature

Comments/suggestions Gap in the literature Studies in relation to corporate governance and capital structure yield mixed results even in an international context. The investigation of these concepts in Australia is totally unexplored and has been paid inattention until recently. Particularly, a narrow focus on the concepts of ownership structure, board structure, investment opportunity and leverage has been researched by some of the scholars. What is sample? Any study on pre and post governance reforms? Even though corporate governance mechanisms are similar to all the listed firms, they do not perform similarly. Because in large firms corporate governance settings may be strong, whereas weak governance settings may prevail in the small and medium sized firms. Hence, it is important to further extend this analysis of leverage decision under two different governance mechanisms.

Suggestions 4-Contributions

Comments/suggestions Contributions

Suggestions 5-Theoretical linkage

Comments/suggestions Challenge in theoretical linkage: Pay attention CG reduce leverage in CS CG reduces leverage because leverage as a substitute monitoring mechanism? CG reduces leverage because better corporate governance enhances the ability of a firm to gain access to equity finance, reducing dependence on debt finance? CG increases leverage in CS CG improves leverage because CG reduces the cost of debt? CG improves leverage because leverage as a proxy of risk taking?

Suggestions 6-Motivation of study

Comments/suggestions Challenge in motivation of study Why studying capital structure is important? Why studying the relationship between corporate governance and capital structure in Australia is important? Institutional factors Different; stronger or weaker

Chang, Y. K. , Chou, R. K. , & Huang, T. H. (2014) Chang, Y. K., Chou, R. K., & Huang, T. H. (2014). Corporate governance and the dynamics of capital structure: New evidence. Journal of Banking & Finance, 48, 374-385. Discuss this paper Optimal capital structure?

Suggestions 7-Terminalogies

Comments/suggestions Be consistent in the use of terminologies Replace “this study” with “we” Agency conflict, Agency cost, Agency problem Capital structure or leverage or debt. You are using leverage in RQ1. You are using capital structure in RQ2. Corporate governance, aspects of corporate governance, Corporate governance practices, governance structure, governance mechanisms. Strong corporate governance, higher governance, good corporate governance, poor governance, governance quality, quality of corporate governance, better corporate governance, governance index

8-Referencing and proofreading Suggestions 8-Referencing and proofreading

Comments/suggestions Update the references (Time and Journal) Minor issues: proof reading required… Year Frequency 2015 3 2014 1 2013 8 2012 6 2011 2010 <2010 30 Total 50 Journals Frequency JF 6 JFE JFQA RFS JCF 3 JBF 2

Suggestions 9-Proposed idea

Proposed Idea Cost of debt Corporate governance Firm specific Capital structure Stock liquidity Financial distress

GOOD LUCK with your research!!!!