The Impact of Corporate Governance on the Capital Structure of Domestic Companies

The choice of the optimal capital structure is one of the biggest challenges that the company’s top management faces due to the fact that the right strategy secures the company’s financial stability, sustainable development and capital-raising potential. This study aims at establishing a connection between the capital structure of Russian companies and corporate governance. Literature background of the paper consists of foreign and Russian authors’ works in the field of behavioral finance. Observations from 60 Russian companies were employed in the study. The major findings obtained by economic and mathematical modeling are as follows: 1. positive connection was established between the size of board of directors, number of independent directors and debt in capital structure; 2. positive connection between CEO’s age and short-term debt in capital structure; 3. no correlation between gender of directors and debt. The findings of this study may be used for determining the optimal capital structure strategy. Moreover, this information may be taken into account by top-management, directors, etc. for internal valuation of a company’s operations including sound valuation of the corporate governance factors that influenced the company’s capital structure.