Moderating impact of corporate governance on capital structure and corporate performance : An energy sector

The present study examines the role of capital structure on financial performance of energy sector companies in a major emerging economy. By concentrating on the moderating effect of corporate governance practices on ownership structure and corporate performance, it closes a gap in the research. It uses energy companies financial data for a period of 10 years (2014-2023), employing panel regression approach using fixed-effect estimation. Debt-equity ratio, debt-asset ratio has been considered for measuring capital structure whereas return on assets has been taken as proxy of financial performance. The results were validated using GMM model (Generalized Method of Moments) to control for potential endogeneity. Corporate governance has been measured by size of Board, , CEO duality, board independence, and size of audit committee. Based on regression results, the study finds a substantial detrimental impact of capital structure on performance of business. Further, the moderation analysis has revealed mixed results as board size and independence positively moderates performance of firm and capital structure whereas CEO duality and audit committee have negative moderating effect. The current study provides significant implications for management and extends literature on debt financing and corporate performance particularly the underexplored corporate governance’s role.