The influnce of corporate governance on the capital structure desicion

Corporate governance is a very important topic in recent days. Every day investors, creditors and other parties are requesting better corporate governance applications from corporations.The main purpose of this study is to analyze the relationship between corporate governance and capital structure decision of Turkish companies quoted at ISE 100 Index both theoretically and empirically. The sample of the study consists of 49 non financial firms with 2005-2007 data available on their websites and ISE website. Board size, outside manager ratio and ownership concentration for corporate governance variables are used.General corporate governance topics are discussed in the first chapter. Also Turkish corporate governance structure is investigated in this chapter. Literature about corporate governance and capital structure is analyzed in the second chapter. Lastly, an empirical analysis about the relationship between corporate governance and capital structure is made in the third chapter.The results show that the relationship between corporate governance and capital structure is statistically significant and the direction is positive for board size and ownership concentration and it is statistically insignificant and negative for outside manager ratio in Turkey.