The Influence of Ownership Structure on Capital Structure: A Systematic Literature Review
The Influence of Ownership Structure on Capital Structure: A Systematic Literature Review

Summary/Abstract: Purpose: This research has been conducted to find the influence of ownership structure on capital structure and how ownership structure influences the firm's capital structure decisions. Design/Methodology/Approach: This research follows a systematic literature review design, and the PRISMA Model has been applied. It includes an examination of the existing literature on the mechanisms of ownership structure and capital structure, along with the theories that underpin them. Databases used for literature include JSTOR, Google Scholar, Science Direct and Scopus. Findings: Ownership concentration is positively related to capital structure, which ultimately reduces the opportunistic behaviour of managers. Government ownership is positively associated with capital structure because the government can take debt easily, and foreign ownership, managerial ownership and institutional ownership have an inverse association with capital structure. The inverse relationship between foreign ownership and capital structure is due to foreign investors' behaviour regarding debt financing. Practical Implications: The market may value firms differently depending on their ownership structures and capital structures. Countries with weak investor protection have highly influential ownership structures, which, in turn, influence capital structure. Originality/Value: This study describes how ownership structure influences firms' capital structure and how debt and equity financing play roles in this relationship. Paper Type: Review Paper

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