Investigating the impact of corporate governance mechanisms on capital structure considering the mediating role of capital cost

The aim of the research: 

to investigate the impact of corporate governance mechanisms on the capital structure with regard to the mediating role of the cost of capital is the aim of this study.

In this study, using the information of 153 companies admitted to the Tehran Stock Exchange (1224 companies) during an 8-year period from 1392 to 1399, the hypothesis was tested. Also, in order to test the hypotheses, the panel data econometric technique and Eviuse software have been used.

The findings of this study showed that the size of the board of directors has a negative and significant effect and the duality of the duties of the CEO and institutional ownership has a positive and significant effect on the capital structure, however, the composition of the board of directors does not have a significant effect on the capital structure. It was also found that the composition of the board of directors and institutional ownership have a negative and significant effect on the cost of capital, but the size of the board of directors and the dual duties of the CEO do not play a decisive role in this regard. In addition, it was found that the cost of capital has a negative effect on determining the capital structure, and finally, it was found that the composition of the board of directors and institutional ownership can also influence the choice of the company's capital structure through influencing the cost of capital.

The findings of this study are consistent with the agency theory argument that effective governance strategies, by reducing information asymmetry and agency costs, have reduced the cost of capital, which ultimately forces companies to restructure their financial mix and capital structure. Therefore, some components of corporate governance and cost of capital have important implications for capital structure decisions of companies admitted to the Tehran Stock Exchange.