Abstract:
The company directors decide all corporate decisions on the board, and these decisions are
implemented after voting by shareholders. Thus, the board of directors is the main decision
maker. The success and productivity of a company are significantly influenced by the
characteristics of its board of directors (BOD). In particular, board directors’ characteristics
influence their choice of optimal Capital Structure decisions. Therefore, this study aims to
investigate the impact of board directors’ characteristics on capital structure decisions in the
top 70 non-financial companies listed on the Colombo Stock Exchange. The dependent
variable of this study is capital structure decisions, which are measured using the debt-equity
ratio. The independent variables were board size, board composition, CEO duality, board
meetings, and board gender. The control variables were firm size and profitability. The study
population comprises non-financial companies listed on the Colombo Stock Exchange. To
ensure a reasonable sample size, this study considered the top 70 turnover nonfinancial
companies according to the purposive sampling method. The study covers a five-year dataset
from 2019 to 2023. This study used descriptive, correlation, and regression analyses. The
findings reveal that board size has a significant positive impact on capital structure, and CEO
duality and board gender have a significant negative impact on capital structure decisions.
Moreover, the findings revealed that board composition and meetings had no significant
impact on capital structure decisions. It is supported by policymakers, regulators, and
management to enhance the corporate governance system of non-financial companies in Sri
Lanka. This study limited the generalizability of the findings due to its focus on a specific
geographic area.
