Law, governance and capital structure: The relationship between law, governance and their impact on the capital structure

Abstract: Legal reforms that followed after the corporate scandals in the early years of the new millennium were aimed at influencing governance and ultimately financial markets. Previous research has shown that either law and/or governance influence financial markets and thereby capital structures. We investigate if this statement holds, by focusing on different legal systems. We found that the statement by previous research does not hold when focusing on a legal system however the statement is valid for certain sectors on an industry level within a legal system.