DYNAMIC CAPITAL STRUCTURE IN EMERGING MARKET: ROLE OF PRODUCT MARKET COMPETITION AND CORPORATE GOVERNANCE

Abstract

This study focuses on the relationship between corporate governance, product market competition, and dynamic capital structure. To explore and analyze the phenomena, annual data of all non-financial sectors of the Pakistan Stock Exchange (PSX) with a minimum of 10 listed firms was analyzed from 2014 to 2023. Variables used in this study include corporate governance as an independent variable, dynamic capital structure as a dependent variable, and product market competition as a moderate variable. Panel data techniques are applied for data analysis. Results show that firms with good governance operating in competitive industries achieve their target leverage, more significant than those with weak governance in competitive sectors. Furthermore, firms with good governance operated in concentrated industries achieved their target leverage, more than firms with poor governance operated in concentrated industries. The study has significant implications for managers and investors.