Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/321391 
Year of Publication: 
2024
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 12 [Issue:] 1 [Article No.:] 2295155 [Year:] 2024 [Pages:] 1-16
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This study investigates the relationship between board characteristics (Sharia boards and boards of directors) and capital structure decisions of Islamic commercial banks (ICBs). The sample consisted of 14 ICBs in Indonesia operated during 2007-2021. The data were analyzed using the random effect model and the feasible generalized least square model. The results reveal that the size and independence of the board of directors and Sharia board expertise have a positive impact on the Indonesian ICBs' debt-to-total asset ratio decision. Furthermore, board gender diversity encourages ICBs in Indonesia to adopt a lower debt-to-total equity ratio (DTER) while the size and expertise of Sharia boards encourage ICBs to pursue higher DTER. This study reinforces the agency theory's view regarding the relationship between board characteristics and corporate capital structure decisions. Corporate financial management aims to maximize shareholders' wealth. Furthermore, making optimal capital structure decisions is one of the functions of a financial manager, in addition to investment decisions and dividend payout policies, in order to achieve company goals. Besides being related to maximizing shareholders' wealth, the capital structure decisions of Islamic banks also indicate the banks' compliance with Sharia rules. Therefore, capital structure decisions in the context of Islamic banks become more important.
Subjects: 
Board characteristics
Capital structure
Islamic bank
Indonesia
Developing country
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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