The Effects of Ownership Structure and Governance on Corporate Financing Decisions

We analyze the impact of firm-specific stock market liberalization events on the capital structure and debt maturity decisions of firms from emerging market economies. In particular, we focus on the potentially different responses of firms with different ownership structures and associated governance regimes at the time of liberalization. Our empirical results show that single-class-share (typically with stronger corporate governance) firms respond differently to their dual-class-share counterparts. Liberalization results in lower debt reliance for the former group while the latter lengthen the maturity of their debt portfolios.