Board Network, Capital Cost and Capital Structure

Document Type : Original Article

Authors

1 Assistant Prof. Department of Accounting and Finance, Faculty of Economics, Management and Accounting, Yazd University, Yazd, Iran

2 Assistant Prof. Department of Accounting, Isfahan University, Isfahan, Iran

3 Ph.D. Candidate in Accounting, Shahid Bahonar University of Kerman, Kerman,, Iran

10.22034/iaar.2023.185375

Abstract

Among the goals of managers is to maximize the wealth of shareholders and reduce the capital cost. In this regard, deciding on the capital structure is one of the most important strategies to achieve these goals. Since, Board of directors is one of the main decision-making groups in in this field. Therefore, the relationships that can be seen in the form of a social network between the board members of different companies, the purpose of this study is to examine the capital cost and the capital structure in the relations network of the board of directors of companies in the Iranian stock market and is based on data related to 115 companies in the period 2012-2020. Network analysis and regression analysis were used to conduct research tests. Findings showed that in the communication network of companies, some of them are in a better position and have more access and effectiveness. Better location can lead to easier access to information and resources faster. Also, the results of testing the hypotheses showed that there is no significant relationship between the betweenness centrality, and the capital cost and the capital structure. But there is a significant negative relationship between the closeness centrality, and the capital cost and capital structure, and a significant positive relationship between the degree centrality and the capital cost and the capital structure. In other words, it can be said that the position in the structure of relationships can somehow affect the capital cost of companies and their capital structure.

Keywords

References

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Accounting and Auditing Research
Volume 15, Issue 59
October 2023
Pages 141-160

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