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Article

Governance, Ownership Structure, and Financial Leverage: The Role of Board Gender Diversity in UK Firms

by
Dramani Angsoyiri
1,
Fadi Alkaraan
2,3,* and
Judith John
1
1
Lincoln International Business School, College of Arts Social Sciences and Humanities, University of Lincoln, Lincoln LN6 7TS, UK
2
Lincoln International Business School, University of Lincoln, Lincoln LN6 7TS, UK
3
Gulf Financial Center, Gulf University for Science and Technology, Mishref, P.O. Box 7207, Hawally 32093, Kuwait
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2025, 18(5), 276; https://doi.org/10.3390/jrfm18050276
Submission received: 30 March 2025 / Revised: 12 May 2025 / Accepted: 13 May 2025 / Published: 17 May 2025
(This article belongs to the Section Economics and Finance)

Abstract

This paper aims to investigate the relationship between governance structure, ownership structure, and financial leverage of corporations in the UK, with a special emphasis on the boardroom gender diversity. The study sample includes 484 UK firms from the FTSE All-Share Index for the period (2015–2023), with 4356 firm-year observations. The results show that CEO duality, gender diversity, managerial ownership, institutional ownership, and government shareholding are all positively associated with financial leverage, thus confirming the importance of these governance and ownership characteristics in determining capital structure policies. On the other hand, board size and the proportion of non-executive directors are not found to have a significant impact on financial leverage, which points to some room for improvement in UK board practices. In this regard, the study contributes to the governance-sustainability-finance nexus discussion by focusing on these dimensions in the UK corporate sector. As such, the findings of this study are important in providing policy recommendations for policymakers and corporate leaders and contribute to the ongoing wave of global corporate governance reforms and practical insights into enhancing governance frameworks at the firm level.

1. Introduction

Debates on corporate governance and sustainability remain central to the ongoing pursuit of good governance practices (Alkaraan, 2018). These discussions continue to engage researchers, practitioners, regulators, and policy makers, reflecting their significant implications for organisational performance and broader environmental and social concerns aligned with the Sustainable Development Goals (SDGs) The nexus between best practises in corporate governance mechanisms and organisational performance remains a current and critical issue for a range of stakeholders, including regulators, standard-setters, academics, and practitioners (Alkaraan, 2023). Understanding how governance structures influence firms’ financial behaviours is a critical area of inquiry in corporate finance, as emphasised by seminal agency theory studies (Jensen & Meckling, 1976). Agency theory posits that conflicts between managers and shareholders, if not properly managed through governance mechanisms and can significantly impact key financial decisions, such as capital structure and leverage policies, indeed, governance attributes such as board composition, ownership concentration, and leadership roles have been widely recognised as influential factors shaping firms’ financial choices, including their use of debt and equity (Fam Fama & Jensen, 1983).
In recent years, an emerging body of research has sought to bridge the gap between theoretical expectations and real-world governance practices, with particular attention to the role of boardroom gender diversity (Yakubu & Oumarou, 2023). This study is grounded in the agency theory framework, which provides a robust lens through which to assess how governance mechanisms, including board diversity, impact corporate financial behaviour. The UK is a relevant case to examine these relationships as it is still in the process of refining its regulatory framework and paying much attention to the improvement of corporate governance. The UK Corporate Governance Code and other programmes, including the Hampton-Alexander Review, have also been advocating for boardroom diversity, with a particular focus on the number of women board members. These shifts are based on the proposition that diverse boards lead to better decision-making processes that, in turn, enhance firm value and reduce excess risk taking (Karamatzanis et al., 2025). Given these changes, the effects of gender diversity on the board of directors on financial leverage decisions remain relatively unknown, especially in the specific context of the UK.
Leverage financial decisions are very important for firms because they have a significant implication for risk management, investment policies and overall financial health of the firm (Karamatzanis et al., 2025). Knowing how governance structures and ownership arrangements, including gender diversity, impact these decisions is not only important from a theoretical point of view but also has implications for policy makers, investors, and managers. Wu et al. (2024) investigate how financial flexibility impacts firm performance, with a particular emphasis on the moderating roles of investment efficiency and investment scale. By drawing on empirical data, the study demonstrates that the relationship between financial flexibility and firm performance is not uniform but is significantly shaped by how effectively and at what scale firms allocate their investments. The findings contribute to the literature by highlighting the importance of strategic investment behaviour in maximising the benefits of financial flexibility (see Alkaraan, 2021). Building on this prior work, our manuscript advances the discourse by examining how gender diversity specifically influences capital structure decisions in the evolving post-Brexit UK context. Although many studies have investigated governance–leverage relationships (Shleifer & Vishny, 1997), the effect of gender diversity on such relationships remains an underexplored area, particularly in the UK setting. Wu et al. (2023) explore the moderating effects of corporate governance and investment efficiency on the relationship between financial flexibility and firm performance. Their findings underscore the importance of governance mechanisms in shaping financial outcomes, providing a theoretical foundation that complements the current study’s focus on gender diversity within corporate governance structures.
This study attempts to fill this gap by investigating the effects of governance and ownership structures on financial leverage in UK companies with a view to the impact of gender diversity on corporate boards. In examining these relationships, this research seeks to extend the current understanding of governance and financial decision-making in the context of UK firms and their governance and financial regulation challenges. Analysing the board’s characteristics helps in understanding how governance mechanisms affect financial decisions, for example, large boards may have richer diversity but may also prove to be sluggish, while non-executive directors may improve the board’s oversight and risk management. Similarly, CEO duality, where the CEO also serves as the board chair, could centralise power and affect leverage policies, and female board representation might introduce varying risk preferences and governance styles, simultaneously, ownership structure plays a crucial role in determining leverage decisions, as different types of ownership align managerial incentives and risk preferences in distinct ways. Managerial ownership may reduce agency conflicts, while institutional investors, with their preference for stability and monitoring capabilities, could shape firms’ financing choices. Government ownership adds another layer of complexity, as public policy goals may influence financial decision-making. From these two dimensions, board characteristics and ownership structures, this chapter aims at discussing the factors that affect corporate financial leverage within the UK context as outlined in this chapter and hence his analysis not only contributes to the theoretical discourse but also offers helpful suggestions to the policy makers, investors, and corporate managers to enhance the governance and financial policies.
Although many studies have been performed to enhance the theories of capital structure, such as the Modigliani and Miller Theorem of 1958 and the trade-off theory by Kraus and Litzenberger (1973), the role of governance mechanisms like board characteristics and ownership structure in determining financial leverage decisions has not been sufficiently postulated and proven. Although the new theoretical frameworks are agency theory of (Jensen & Meckling, 1976), corporate governance principles of (Hart et al., 1997) and the frameworks of behavioural finance of (Shefrin, 2001), these frameworks have not been integrated into the capital structure decision-making process with respect to governance mechanisms that affect managerial incentives and decision-making. An organisation’s financial stability and strategic direction are intimately tied to the relationship between board characteristics, ownership structure, and corporate financial leverage, for example, a study of 12,384 firm year observations from 2006 to 2020 found that corporate board reforms in the UK increased the speed of adjustment in firms’ capital structures, especially for those with high agency costs before the reforms (Ezeani et al., 2024). This suggests that well-structured boards can effectively oversee financial policies, ensuring that leverage levels align with the firm’s strategic objectives and risk appetite. This underscores the necessity for independent and robust board structures to mitigate risks associated with concentrated decision-making, and hence understanding these interdependencies is crucial for advancing corporate financial governance and ensuring sustainable financial strategies in UK firms. Accordingly, we have postulated the research question/s underpinning this study as follows:
  • RQ1. How does the corporate governance structure affect corporate financial leverage decisions in UK companies?
  • RQ2. What is the impact of ownership structure on corporate financial leverage in UK companies?

2. Theoretical Framework

This study is grounded in two key theories: the Pecking Order Theory (Myers & Majluf, 1984) and the trade-off theory (Modigliani & Miller, 1963; Kraus & Litzenberger, 1973), to explore how governance structure, ownership structure, and boardroom gender diversity influence financial leverage decisions in UK firms. The Pecking Order Theory suggests that firms prefer internal financing due to information asymmetries and lower signalling costs, which aligns with evidence that gender-diverse boards tend to promote more conservative financial policies (Liu et al., 2014; Yakubu & Oumarou, 2023). In this context, firms with gender-diverse boards may prioritise internal funding over debt, reflecting the more risk-averse and long-term stability preferences often attributed to female executives. On the other hand, the trade-off theory argues that firms strategically balance the tax benefits of debt against the potential costs of financial distress. Strong governance structures, such as those provided by gender-diverse boards, may help firms navigate this balance, allowing them to strategically use debt while maintaining financial stability (Askarany et al., 2025). Integrating both theories enables a nuanced analysis: while gender-diverse, well-governed firms may prefer lower debt levels, they may still engage in strategic debt use when it aligns with long-term growth goals. This dual-theoretical approach is critical for understanding the complex financial behaviour of UK companies today.
Several theories underpin the relationships between governance structure, ownership structure, boardroom gender diversity, and financial leverage. The Pecking Order Theory, first introduced by Myers and Majluf (1984), posits that firms prefer using internal resources (retained earnings) over debt or equity issuance due to information asymmetry, where managers possess more knowledge about the firm’s value and risk than external investors. In line with this theory, firms with gender-diverse boards tend to exhibit more conservative financial policies, minimising the reliance on external debt (Liu et al., 2014). Female executives are often viewed as more risk-averse, with a focus on fiscal prudence and long-term sustainability. This aligns with the Pecking Order Theory’s preference for internal funding. In contrast, the trade-off theory suggests that firms make financing decisions by weighing the tax advantages of debt against the costs of financial distress (Modigliani & Miller, 1963; Kraus & Litzenberger, 1973). Well-governed firms, including those with gender-diverse boards, are more likely to make optimal debt decisions, using leverage selectively to balance the benefits of tax shields with the risks of financial distress. In the UK context, governance and ownership structures significantly influence leverage decisions, with firms that have concentrated ownership potentially preferring internal financing to retain control, while firms with higher institutional ownership may opt for lower leverage to ensure stability and long-term growth. Female directors, associated with lower risk appetite and stronger fiscal management, may lean towards conservative debt policies, but within the trade-off theory, they could also recognise strategic opportunities for using debt in a controlled manner, aiming for moderate leverage to maximise firm value without excessive risk.

3. Literature Review: Hypotheses Development

3.1. The Relationship Between Board Size and Corporate Financial Leverage Decisions

Successful investment decisions making require effective strategic control mechanisms that link inputs, processes, outputs and outcomes straightforward and uncontroversial (see Alkaraan & Northcott, 2007; Alkaraan & Floyd, 2020) Board size remains a fundamental dimension of corporate governance that influences financial leverage decisions and from a theoretical standpoint, both large and small boards present distinct governance dynamics. However, the specificity of the Anglo-Saxon context, particularly the UK, warrants a more nuanced understanding.
In the UK’s shareholder-oriented governance environment, corporate boards are expected to balance expertise, independence, and accountability (FRC, 2018), Javed et al. (2024) argue that larger boards may face coordination and collective action problems, impairing their ability to make timely strategic financial decisions, including leverage optimisation, this resonates with earlier findings emphasising the inefficiency risks associated with large boards in high-accountability systems such as the UK (Guest, 2009).
Other research indicates that bigger boards could provide advantages in complex markets with regulatory requirements. The research by Zaman et al. (2024) shows that bigger boards possess more advisory skills and expertise, which benefits firms that need more financing, especially since many UK-listed companies operate under this condition in the mature UK capital market, where firms use complex financing approaches. The advisory benefits of larger boards may help counterbalance coordination difficulties in firms that operate in sophisticated markets such as London. Similarly, Sajwani et al. (2024) find that board expansion correlates with greater debt capacity, especially where firms seek competitive advantage through strategic financial leverage.
Conversely, Tahir et al. (2020) document a negative relationship, arguing that larger boards in strong governance environments may exert conservative pressure, thus discouraging excessive leverage to protect shareholder value.
Within the UK context, where governance codes emphasise board effectiveness, transparency, and risk management, this suggests that board size can either enhance or constrain leverage, depending on the firm’s complexity and regulatory environment. Our study, therefore, extends prior research by theorising that in the UK setting, the relationship between board size and financial leverage is contingent upon the interaction between board functionality and the institutional emphasis on governance quality, accordingly, we propose the following hypothesis:
H1. 
There is a significant positive relationship between board size and corporate financial leverage in the UK, contingent on the firm’s complexity and governance structure.

3.2. The Role of Non-Executive Directors in Shaping Corporate Financial Leverage Strategies

Non-executive directors (NEDs) play a crucial role in Anglo-Saxon corporate governance systems especially in the UK to preserve board independence and protect shareholder interests (Zhang & Fang, 2025). Agency Theory (Jensen & Meckling, 1976) identifies independent directors as essential for controlling agency costs through their oversight of management choices about financial leverage. In principle, stronger monitoring through independent boards should either promote disciplined use of debt or support higher leverage by enhancing creditor confidence.
However, empirical findings remain mixed, especially within governance systems similar to the UK’s. In developed economies, and Zhang and Fang (2025) found a positive association between the proportion of non-executive directors and leverage, suggesting that robust oversight allows firms to access debt markets more effectively and this reflects an application of the Pecking Order Theory (Myers & Majluf, 1984) in mature markets, where information asymmetry is lower, and strong governance reassures external creditors.
Conversely, studies from emerging markets (Tahir et al., 2020) show negative or insignificant relationships, arguing that independent directors often act conservatively, discouraging high leverage due to financial risk concerns, a finding aligned with the Trade-off Theory (Kraus & Litzenberger, 1973), which emphasises balancing the benefits and risks of debt.
Specifically for the UK, characterised by stringent corporate governance codes and sophisticated capital markets, independent directors are expected to weigh the benefits of debt (e.g., tax shields) against the risks of financial distress carefully. Thus, rather than confirming existing associations mechanically, this study advances a new theoretical insight: board independence in UK firms is expected to influence leverage decisions conditionally, promoting optimal, risk-aware debt usage rather than merely increasing or decreasing leverage outright.
Building on the integration of Agency Theory, Pecking Order Theory, and Trade-off Theory, not just describing them but using them to form a contextualised, testable proposition, we propose the following hypothesis based on the above:
H2. 
The proportion of non-executive directors on corporate boards is significantly and positively correlated with corporate financial leverage.

3.3. The Impact of CEO-Chairman Duality on Business Financial Leverage

In corporate governance frameworks typical of Anglo-Saxon economies, including the UK, Agency Theory (Fam Fama & Jensen, 1983) strongly advocates for the separation of the CEO and Chair roles to minimise agency conflicts and promote effective oversight. The argument is that separating decision management (CEO) from decision control (Board Chair) ensures better accountability, reducing opportunistic behaviours that could affect financial policies, including leverage decisions.
However, Stewardship Theory offers a countervailing view. According to Krause et al. (2024), unifying leadership under a single figure clarifies corporate vision and authority, promoting stronger internal coordination and potentially enhancing firm performance. In line with this, empirical studies by Pollock et al. (2023) find that CEO duality is often associated with higher debt levels, supporting the idea that consolidated leadership enables quicker, less conflicted decision-making, including greater willingness to leverage.
Wang et al. (2021), studying firms in China’s transitioning economy, similarly report a positive association between CEO duality and debt ratios, suggesting that centralised control encourages strategic risk-taking, including higher reliance on debt financing. Nevertheless, findings are not universally consistent: Farooq et al. (2024) in a BRICS context report a negative relationship between CEO duality and leverage, while Huynh et al. (2022) find no significant relationship in Thailand.
Within the UK context, characterised by strong investor protection, rigorous governance codes (e.g., the UK Corporate Governance Code), and an emphasis on transparency, CEO duality is generally discouraged. Yet, this study introduces a nuanced theoretical insight: even where governance frameworks push for role separation, the consolidation of CEO and Chair roles, when it occurs, may still influence leverage decisions by streamlining decision-making and fostering greater strategic risk-taking, consistent with Stewardship Theory’s propositions, but moderated by the UK’s strict governance environment.
Thus, drawing on an integrated framework of Agency Theory and Stewardship Theory, and focusing on the UK’s unique governance landscape, the hypothesis is the following:
H3. 
CEO duality demonstrates a positive correlation with corporate financial leverage within the UK context.

3.4. The Influence of Female Board Representation on Corporate Financial Leverage

Within the corporate governance frameworks typical of Anglo-Saxon economies, Agency Theory suggests that effective board monitoring reduces agency costs and improves corporate decision-making, and recent research emphasises that female directors can play a crucial role in enhancing board independence and governance quality. Agency theory suggests that effective corporate governance mechanisms can mitigate conflicts of interest between managers and shareholders, particularly in financial decision-making. Board gender diversity may enhance governance by improving oversight and reducing managerial opportunism, thereby influencing firms’ capital structure choices. Female directors, as shown in behavioural finance literature, tend to exhibit greater risk aversion and a stronger preference for long-term financial stability. This risk-averse orientation often translates into more conservative debt policies, potentially lowering firms’ reliance on excessive leverage. Moreover, the presence of women on boards can contribute to more inclusive and balanced decision-making processes, which may lead to more deliberate and cautious financing strategies. In addition, female directors are associated with improved transparency, ethical standards, and stronger reputational capital, all of which can enhance a firm’s standing with creditors and reduce the perceived risk of lending. As a result, such boards may not only influence the amount of leverage used but also affect the cost of debt. Safari (2022) argue that female board members, often operating outside traditional corporate networks, exhibit greater independence and objectivity. Similarly, Zalata et al. (2019) report that female directors demonstrate higher attendance rates and stronger commitment to board duties, translating into better oversight of executive actions.
Building on these insights, empirical studies have linked board gender diversity to improved firm outcomes. For instance, Safari (2022) and Anita et al. (2024) associate gender-diverse boards with stronger firm performance and enhanced firm value. In the domain of financing decisions, Alves (2023) provide evidence that greater female representation improves board effectiveness, reduces information asymmetry between management and shareholders, and leads to more prudent financial policies and notably, firms with more gender-diverse boards tend to rely less on short-term debt and prefer long-term financing strategies, reflecting more sustainable capital structure choices.
In the UK context, where governance codes such as the UK Corporate Governance Code encourage board diversity and independence, these dynamics are particularly relevant and this study advances the theoretical discussion by proposing that gender-diverse boards not only improve oversight but also strategically influence leverage decisions in a manner consistent with reducing risk and enhancing long-term financial stability, a perspective aligned with the broader tenets of Agency Theory. Accordingly, the following hypothesis is proposed:
H4. 
The proportion of female board members is positively associated with corporate financial leverage in the UK context.

3.5. The Effect of Managerial Ownership on Corporate Financial Leverage Decisions

Agency Theory (Jensen & Meckling, 1976; Fam Fama & Jensen, 1983) highlights the critical role of managerial ownership in mitigating agency conflicts by aligning managers’ interests with those of shareholders and in the Anglo-Saxon context, particularly in the UK, where dispersed ownership and strong investor rights are prevalent, managerial shareholding becomes an important governance mechanism influencing financial decision-making, including capital structure choices.
However, new theoretical insights emerge when considering the possibility of managerial entrenchment at high ownership levels. As Tawfiq et al. (2024) note, excessive managerial control can diminish external monitoring, leading managers to adopt overly conservative financial policies to protect personal wealth rather than pursue optimal leverage. Thus, while moderate managerial ownership aligns incentives, very high ownership levels may weaken governance discipline, introducing a non-linear relationship between ownership and leverage decisions.
Unlike prior studies that primarily confirm linear associations, this study proposes a dynamic view: in UK firms, the relationship between managerial ownership and leverage is contingent on the degree of ownership concentration. Moderate ownership promotes optimal leverage, but excessive ownership can lead to risk-averse under-leverage, deviating from shareholder wealth maximisation. Thus, the following theory-driven hypothesis is developed:
H5. 
There is a positive relationship between the percentage of shares held by management and corporate financial leverage in the UK.

3.6. The Impact of Institutional Ownership on Corporate Financial Leverage Strategies

The Agency Theory developed by Jensen and Meckling (1976) indicates that professional investors with superior information access can reduce managerial-shareholder misalignment through their monitoring activities. Institutional investors serve as efficient monitors who shape financial policies, including leverage decisions, which leads to lower agency costs. The relationship between institutional ownership and leverage shows inconsistent results in the UK market because corporate governance standards remain strong.
The Trade-off Theory contradicts this perspective by showing how institutional investors who understand capital markets better would use debt financing to maximise tax benefits and achieve optimal capital structures (Dai et al., 2024). The UK market, with its strict governance framework and risk-averse institutional investors, demonstrates that institutional ownership leads to reduced external debt usage for long-term value creation and stability purposes.
The relationship between institutional ownership and leverage in the UK demonstrates a complex pattern because institutional investors both enforce governance standards and adapt to changes in interest rates and regulatory developments that affect financial leverage choices. The analysis requires a detailed understanding of governance structures, together with the UK’s regulatory framework, which affects institutional investor activities. The following theory-driven hypothesis should be considered because of these factors.
H6. 
There is a negative relationship between the percentage of shares held by institutional investors and corporate financial leverage in the UK.

3.7. The Role of Governmental Shareholding in Shaping Corporate Financial Leverage Strategies

Corporate entities exhibit government ownership due to multiple factors which combine policy goals with market stability and financial capability. The relationship between government ownership and corporate leverage faces ongoing debate because different markets produce varying effects.
The Trade-off Theory supports this perspective because firms weigh the advantages of debt financing through tax shields against potential financial distress risks. State-backed organisations in the UK use higher debt levels because they obtain financial advantages and stable borrowing conditions from their government affiliation.
Pecking Order Theory provides a distinct perspective by showing that companies choose internal funding before external debt because external financing comes with information asymmetry costs and other associated expenses. According to this theory, government-owned companies use equity financing instead of debt because they aim to reduce their financial exposure to risk.
The UK presents a unique scenario because government shareholding is strongly linked to both policy framework strategies and public sector responsibility standards. The UK public ownership system allows firms to access big financial resources, yet its governance framework keeps tight control over leverage practices to achieve long-term goals and risk management objectives (Baum et al., 2024). Government ownership in the UK leads to strategic leverage decisions that demonstrate better prudence because of effective governance systems. This study uses theoretical perspectives alongside empirical findings to develop the following research hypothesis:
H7. 
There is a significant relationship between the percentages of governmental ownership and corporate financial leverage.

4. Research Methodology

This study employs a quantitative research approach to examine the determinants of financial leverage among FTSE all-share index firms in the UK. The research follows a positivist paradigm, utilising secondary data analysis to establish empirical relationships between corporate governance variables and financial leverage. The study focuses on the period from 2015 to 2023, chosen due to its relevance to key economic and regulatory changes in the UK. This timeframe captures the post-Brexit period, regulatory updates in the UK Corporate Governance Code, and evolving corporate governance practices, such as increased focus on gender diversity and institutional investor influence, and this period also accounts for significant events like the COVID-19 pandemic, offering a comprehensive context for examining corporate governance and financial leverage.

4.1. Sampling Process

The researchers chose the time from 2015 to 2023 to study how UK companies modify their capital structure and corporate governance systems because it provides a complete and evolving perspective of their adaptation. The research period spans from the financial crisis recovery to the UK corporate governance code implementation and Brexit uncertainty and the COVID-19 pandemic, which probably affected corporate decisions about leverage and board composition, thus making this time frame optimal for studying governance mechanisms and financial leverage interactions under different macroeconomic and institutional environments.
The study included firms based on their availability of essential financial and governance data. The research eliminated companies with incomplete or unreliable data to maintain the reliability of the regression model results. The research used 484 firms, which generated 4356 firm-year observations during the nine-year study period. The fixed effects models in this panel dataset enable researchers to evaluate both within-firm and over-time variations to improve the study’s ability to control unobservable heterogeneity. The multi-year research design enables the analysis to capture strategic firm-level responses to both internal conditions and external economic changes.
This dataset enables an in-depth exploration of the factors influencing corporate financial leverage, while also accounting for potential confounding variables such as industry-specific effects, size, and market conditions.
To ensure reliable data and results, the data (Bloomberg database) was filtered, and some tests were performed on it. The sample selection followed a set of rigorous criteria to ensure the robustness and reliability of the empirical analysis. First, the study focused on firms for which comprehensive and consistent financial and corporate governance data were available throughout the sample period (2015–2023). This approach ensured that the dataset was complete and suitable for panel data analysis, minimising the impact of missing values and reporting inconsistencies. Second, only solvent firms were included in the final sample. Solvency was assessed based on firms’ ability to meet their financial obligations during the sample period, thereby excluding firms undergoing financial distress, administration, or liquidation. This criterion was adopted to ensure that the findings are reflective of normal operating conditions rather than skewed by financial anomalies or bankruptcy-related effects. Third, the sample was restricted to companies listed on the FTSE All-Share Index, representing a broad and diverse range of industries in the UK market. This index captures the performance of approximately 600 of the largest UK-domiciled companies by market capitalisation. Inclusion was further contingent on the availability of both financial and governance-related data to ensure the consistency and comparability of variables across firms and time. Firms from the financial services sector were excluded due to their distinct regulatory frameworks and capital structure characteristics, which could introduce bias into the analysis. These selection criteria resulted in a balanced panel of firms that offered reliable, representative insights into the relationship between corporate governance mechanisms and capital structure decisions within the UK corporate landscape.

4.2. Research Model

The study adopts the capital structure model developed by Nguyen (2024), which incorporates key corporate governance variables such as board size, ownership structure, and CEO characteristics. This model is particularly suited for the UK context as it aligns with the country’s unique corporate governance framework and regulatory environment. Its flexibility makes it adaptable to the study’s specific focus on UK firms, ensuring reliable and valid results, and this combination of empirical strength and adaptability makes Nguyen’s model an appropriate choice for this study.
TDA = β0 + β1 (BSIZE) + β2 (N_EXEC) + β3 (CEO_DUAL) + β4 (G_DIV) + β5 (M_OWN) + β6 (I_OWN) + β7 (G_OWN) + β8 (FSIZE) + β9 (ROA) + β10 (GROW) (1) + β11 (TANG) + β12(LIQ) + β13(BETA) + e
LTDA = β0 + β1 (BSIZE) + β2 (N_EXEC) + β3 (CEO_DUAL) + β4 (G_DIV) + β5 (M_OWN) + β6 (I_OWN) + β7 (G_OWN) + β8 (FSIZE) + β9 (ROA) + β10 (GROW) (2) + β11 (TANG)+ β12(LIQ) + β13(BETA) + e
STDA = β0 + β1 (BSIZE) + β2 (N_EXEC) + β3 (CEO_DUAL) + β4 (G_DIV) + β5 (M_OWN) + β6 (I_OWN) + β7 (G_OWN) + β8 (FSIZE) + β9 (ROA) + β10 (GROW) (3) + β11 (TANG) + β12(LIQ) + β13(BETA) + e
where
  • β0 = Intercept coefficient
  • β1 = Coefficient for each of the independent variables
  • TDA = Total Debt ratio (total debt/total assets) × 100%
  • LTDA = Long-term debt Ratio (long-term debt/total assets) × 100%
  • STDA = Short-term debt Ratio (Short-term debt/total assets) × 100%
  • BSIZE = the number of directors on the firm board
  • N_EXEC = Proportion of non-executive directors sitting on the board
  • CEO_DUAL = (Dummy variable) Value one (1) if the same person occupies the position of the chairman and the chief
  • executive and zero (0) for otherwise.
  • G_DIV = Percentage of females to the total board.
  • M_OWN = Percentage of shares held by top managers.
  • I_OWN = Percentage of shares held by institutions (non-government).
  • G_OWN = Percentage of shares held by the government.
  • FSIZE = the log value of the total asset of the firm.
  • ROA = EBIT/average total assets × 100%.
  • GROW = the percentage change in the value of the asset.
  • TANG = the ratio of total fixed assets to the book value of total assets (%)
  • LIQ = Liquidity Ratio (current assets/current liabilities)
  • BETA (Risk) = Earnings Volatility (standard deviation of operating income over past 3 years)

5. Empirical Analysis and Interpretation of Findings

5.1. Descriptive Statistics

Table 1 shows descriptive statistics.
This study focuses on three key measures of leverage: Total Debt to Assets (TDA), Long-Term Debt to Assets (LTDA), and Short-Term Debt to Assets (STDA), with mean values of 0.349, 0.401, and 0.284, respectively, these figures illustrate that UK firms exhibit substantial variation in their reliance on debt financing, reflecting recent evidence that corporate leverage practises remain highly heterogeneous across industries and firm types (Wan et al., 2024). The minimum and maximum values of TDA (0.001 and 56.004, respectively) further reinforce the wide dispersion in leverage behaviour.
It is important to note that the number of observations for LTDA and STDA is slightly lower than for other variables. This difference stems from incomplete or inconsistent reporting of debt structure components in some firms’ financial statements, an issue increasingly acknowledged in contemporary corporate finance research (Palmieri et al., 2024). In terms of governance structures, the average Board Size (BSIZE), after log transformation, is 1.032, highlighting significant variation in board composition across UK firms. The Number of Executive Directors (N_EXEC) averages 9.66, consistent with findings that board structures in the UK are becoming more specialised and diverse (Zhang & Fang, 2025). CEO Duality (CEO_DUAL)—the dual role of CEO and Board Chair—has a low mean of 0.061, indicating that the practice remains relatively rare and consistent with modern corporate governance recommendations advocating role separation to enhance oversight (Huynh et al., 2022).
Board Gender Diversity (G_DIV), measured as the proportion of female directors, averages 0.332. Although the figure reflects gradual improvement, it still underscores the persistent gender gap in corporate leadership. Recent studies show that while female representation on boards has increased, achieving true gender parity remains a long-term challenge (Mehnaz & Yang, 2025).
From the analysis of the ownership structure, there is a significant variation; managerial Shareholding (M_OWN) is on average 0.522, and there are some very large firms, like a maximum of 62.62, which means that there is a high level of ownership concentration in some firms. This is supported by Institutional Shareholding (I_OWN), which is on average 0.196 and points to the importance of institutional investors in UK governance. Governmental Shareholding (G_OWN) is 0.068 on average, which shows that there is some, but not a lot, of state equity market participation.
Other control variables include Firm Size (FSIZE), which is 4.33 on average (log transformed), and Profitability (ROA), which is 0.081 on average, which are financial characteristics that are likely to influence leverage decisions. Growth Opportunities (GROW) and Asset Tangibility (TANG) are quite volatile and have means of 0.822 and 0.201, respectively, which indicates that firms have different strategic objectives. This detailed statistical description gives a general idea of the variables and their quantities, which help to understand the connections between the board features, ownership arrangements, and leverage in the specific context of UK companies’ governance and finance. The descriptive statistics also reveal that there is a lot of variation in firms in terms of governance structures and financial strategies, and thus provide a strong basis for the empirical analysis to follow.

5.2. Correlation Matrix

The correlation matrix in Table 2 below presents the relationships between various dependent and independent variables associated with the study of how board characteristics and ownership structure influence corporate financial leverage in the UK context. The correlation between Total Debt to Assets (TDA) and other variables shows some weak relationships. TDA has a small negative correlation with the other leverage-related variable, LTDA (Long-term Debt to Assets) (−0.0298), and STDA (Short-term Debt to Assets) (−0.0259), suggesting that as one type of debt increases, the other types may not necessarily follow, at least in a straightforward manner.
As shown in Table 2, a weak positive correlation exists between BSIZE and FSIZE (Firm Size) (0.4886), which means that larger firms have larger boards. This is in line with previous research (Al-Shaer et al., 2024), which has established that larger firms usually need more comprehensive governance structures. However, BSIZE has very weak relationships with leverage variables TDA, LTDA and STDA, which means that board size may not be a key driver of corporate leverage in the UK setting.
This is in concurrence with the findings of recent studies by Huynh et al. (2022) and Pham and Nguyen (2020), who hold the view that board size has no direct effect on the financial leverage of firms. There is a weak positive correlation between M_OWN and LTDA (0.0854), which means that managerial ownership may affect the desire to use long-term debt. This might be since managers tend to prefer long-term debt to ensure financial stability in the long run, insofar as they have a personal interest in the company.
Previous studies by Struckell et al. (2022) have shown that managerial owners tend to favour relatively less volatile, long-term financial structures as well. I_OWN shows a slightly negative correlation with TDA (−0.0061) and LTDA (−0.0598), suggesting that higher institutional ownership may lead to a reduction in debt levels, possibly due to institutional investors’ preferences for more conservative financial structures. This finding is aligned with studies from recent UK research (Shi et al., 2024; Thanatawee, 2023), which found that institutional investors often encourage companies to adopt lower debt levels to reduce financial risk, consistent with the Pecking Order Theory. GOVSH has a negative correlation with LTDA (−0.5220) and STDA (−0.2542), which means that government-owned companies in the UK have a lower average level of debt.
This is in line with findings from earlier studies on state-owned enterprises (SOEs), which are generally less leveraged than private firms due to government support or funding (Vagliasindi et al., 2023; Yue et al., 2024). The government firms may avoid debt equity rationality to keep the financial stability and to avoid fiscal risk, especially in a volatile economic environment. FSIZE has a moderate correlation with BSIZE (0.4886), which supports the proposition that larger firms have more complex governance structures.
It also has a weak negative correlation with TDA (−0.1049), which means that larger firms may not require additional debt financing but rather raise equity. This result is consistent with the previous studies (Arhinful & Radmehr, 2023; M. Farooq et al., 2022), which show that larger firms with better access to capital markets have lower leverage ratios. ROA is negatively correlated with leverage variables such as TDA (−0.0077) and LTDA (−0.0020), which means that more profitable firms in the UK do not require debt financing, as supported by the Pecking Order Theory.
Similarly, there is a moderate positive correlation between GROW and LTDA (0.1366), which means that firms with higher growth prospects may require more debt to finance their growth. This is in conformity with previous studies (Akhtar et al., 2022) that establish that leverage is used by growth-oriented firms to fund new projects such as ESG-oriented acquisition projects (see Alkaraan, 2022; Feyisetan et al., 2025) and green innovation strategies (Alkaraan et al., 2025) and circular economy strategies (Alkaraan, 2022). There is a weak positive correlation of TANG with LTDA (0.0415) and STDA (0.0378), which means that firms with more tangible assets may have a marginal preference for debt financing since these assets can be used as collateral.
This result is in concordance with the asset substitution theory that postulates that firms with higher tangible assets are likely to prefer debt (Jiang et al., 2021). This correlation matrix offers important information on the relationships between corporate financial leverage, ownership structures, and board characteristics in the UK setting. Some correlations are weak, but the results are consistent with key theories such as the Pecking Order Theory, agency theory, and asset substitution theory. These findings further stress that both internal factors (board size and firm size) and external factors (institutional and government ownership) affect corporate financial decisions and have implications for governance practices, leverage choices, and long-term financial stability of UK firms.

5.3. Regression Analysis

The results of the regression analysis are depicted in Table 3.
Table 3 presents the regression analysis examining the relationship between corporate governance mechanisms and financial leverage, addressing hypotheses H1–H7. The empirical model is grounded in agency, stewardship, and resource dependency theories.
Starting with H1, board size (BSIZE) is positively associated with total leverage (TDA: 0.224) but statistically insignificant (p > 0.05), indicating no strong effect on leverage. Similarly, for H2, the proportion of non-executive directors (N_EXEC) is not statistically significant across all leverage measures (TDA, LTDA, STDA), suggesting limited influence.
In support of H3, CEO duality (CEO_DUAL) shows a positive and significant relationship with long-term leverage (LTDA: 0.0495, p < 0.01), implying that combined leadership positions encourage higher reliance on long-term debt.
For H4, gender diversity on boards (G_DIV) exhibits a strong positive effect on total leverage (TDA: 0.418, p < 0.001), but a negative and significant effect on both long-term (LTDA: −0.0514, p < 0.01) and short-term leverage (STDA: −0.0356, p < 0.01).
Turning to H5, managerial ownership (M_OWN) is positively associated with long-term leverage (LTDA: 0.00540, p < 0.01), consistent with managerial alignment theories.
H6 is supported by the positive relationship between institutional ownership (I_OWN) and short-term leverage (STDA: 0.0427, p < 0.01), suggesting that institutions influence firms towards short-term financial flexibility.
Finally, H7 finds strong support: government ownership (G_OWN) shows a significant negative effect on both long-term (LTDA: −1.233, p < 0.001) and short-term leverage (STDA: −0.407, p < 0.001), consistent with risk-averse policies.
Control variables also behaved predictably. Firm size (FSIZE) and profitability (ROA) are negatively associated with total leverage (TDA), while growth opportunities (GROW) show a positive relationship with both LTDA and STDA. Notably, liquidity (LIQ) and beta (BETA), representing risk and liquidity conditions, exhibit statistically significant effects, underscoring their role in leverage decisions.
To address potential biases arising from omitted firm-level characteristics and time-specific shocks, a fixed effects regression model was employed, controlling for firm and year heterogeneity (Table 4), this enhances the robustness of the findings related to corporate governance, ownership structure, and financial leverage in UK firms, with a particular focus on board gender diversity.
Board size (BSIZE) remains positively associated with total leverage (TDA: 0.113) and negatively associated with long-term leverage (LTDA: −0.053), although neither relationship is statistically significant (p > 0.05) and hence this result is consistent with earlier findings and supports the view that mere increases in board size do not meaningfully impact capital structure decisions, in line with Yakubu and Oumarou (2023) and CEO duality (CEO_DUAL) continues to demonstrate a positive and statistically significant relationship with long-term leverage (LTDA: 0.039, p < 0.05), but remains insignificant for total and short-term leverage. This finding provides further evidence supporting stewardship theory indicating that unified leadership fosters a preference for long-term financing strategies.
Gender diversity on boards (G_DIV) persists as a crucial governance factor influencing financial leverage. A strong positive association is observed with total leverage (TDA: 0.390, p < 0.001), while negative and significant effects are found for both long-term leverage (LTDA: −0.042, p < 0.001) and short-term leverage (STDA: −0.030, p < 0.01), these results reinforce the notion that gender-diverse boards are more likely to employ debt financing overall but structure it in a way that mitigates risk exposure by balancing debt maturities and therefore aligns with Kyere and Ausloos (2021) who argue that female directors contribute to more strategic and risk-sensitive financial decision-making.
Importantly, the inclusion of firm and year fixed effects strengthens the confidence in these relationships by addressing concerns related to endogeneity and omitted variable bias. The within R2 values (TDA: 0.12; LTDA: 0.32; STDA: 0.09) suggest that the governance variables explain a meaningful proportion of the variation in leverage, particularly for long-term debt structures.
Table 5 further addresses concerns regarding endogeneity, particularly the potential for reverse causality between corporate governance and financial leverage.
An Instrumental Variable Two-Stage Least Squares (IV-2SLS) approach was employed, industry-average leverage was used as an external instrument, consistent with prior studies (Frank et al., 2023).
In the first stage, industry-average leverage is strongly and positively associated with firm-level leverage (coefficient = 0.623, p < 0.001), indicating a strong and relevant instrument; the Cragg-Donald F-statistic of 35.8 exceeds the conventional threshold of 10, confirming that weak instrument concerns are unlikely (Sanderson & Windmeijer, 2016).
In the second stage, the coefficient on predicted leverage is positive and highly significant (coefficient = 0.377, p < 0.01), which reinforces the earlier OLS and fixed effects findings that leverage is systematically related to governance structures, particularly board gender diversity, managerial ownership, and CEO duality.
Importantly, the Hansen J-test p-value suggests that the model is not over-identified, meaning the instrument’s validity cannot be rejected, further strengthening confidence in the causal interpretation of the results.
By using an exogenous measure like industry-average leverage, the IV-2SLS results mitigate endogeneity concerns raised earlier and affirm the robustness of the key findings. Specifically, they bolster the conclusion that corporate governance mechanisms, especially board gender diversity (G_DIV), have a causal influence on firms’ leverage choices, rather than merely correlating with them (Kyere & Ausloos, 2021).
Thus, these results confirm that gender-diverse boards are associated with strategic leverage decisions even after accounting for endogenous influences and hence aligning with stewardship and resource dependency theories in the context of UK firms (Hu et al., 2024).

5.4. Discussion

The results present nuanced insights into the governance–leverage relationship in UK firms. The lack of significant influence for board size and non-executive directors (H1 and H2) aligns with previous mixed findings, suggesting that structural governance features alone may be insufficient to alter capital structure decisions (Yakubu & Oumarou, 2023).
The support for H3 regarding CEO duality lends credence to stewardship theory indicating that unified leadership can lead to more confident and longer-term financing strategies, contrasting with the agency theory’s preference for role separation.
The evidence for H4 highlights the complex role of gender diversity, while female directors contribute to overall debt use, they simultaneously encourage a more cautious and diversified maturity structure, this confirms the view that board diversity enhances strategic financial management and risk moderation (Kyere & Ausloos, 2021).
Findings for H5 and H6 reinforce agency theory and resource dependency perspectives, managerial ownership aligns interests, leading to prudent debt choices, while institutional owners influence maturity preferences, promoting liquidity and financial flexibility over rigid long-term debt strategies (Hu et al., 2024)
Government ownership’s significant negative impact on leverage (H7) echoes global evidence that state-affiliated firms pursue more conservative financing policies (Yang et al., 2023).
Overall, the empirical findings highlight that corporate governance mechanisms—particularly CEO duality, gender diversity, managerial shareholding, institutional ownership, and government ownership—play critical roles in shaping capital structure decisions, while mere board size and non-executive presence are less impactful.

6. Conclusions

This research examines how corporate governance mechanisms and ownership structures impact financial leverage in UK companies, with a special emphasis on the boardroom gender diversity. The study uses data from UK firms between 2015 and 2023 to propose some significant insights into the governance-leverage relationship specific to the UK context. The findings partly support five out of the seven hypotheses, which means that governance attributes such as CEO duality, gender diversity, managerial ownership, and institutional shareholding are significant in influencing financial decisions, for example, CEO duality is positively associated with long-term leverage, as predicted by stewardship theory, which postulates that unified leadership is better for strategic coordination and financial performance. These results indicate that profitable firms are not necessarily debt averse and therefore reject the hypothesis that firms prefer internal funds to debt. Growth is found to be negatively associated with total debt and short-term debt, a result that is consistent with agency theory: High growth firms should be risk averse and thus should avoid debt, the results also show that tangibility has a negative relationship with total and short-term debt, but a positive relationship with long-term debt, which means that firms with higher tangible assets use long-term debt rather than short-term financing. Hence, these results support the proposition that board characteristics and ownership structure are important in determining the capital structure of UK-listed firms and hence cannot be ignored in financial decision-making.
Gender diversity is found to have a significant effect on leverage decisions for all types of firms, in line with the UK regulatory reforms, such as the Hampton–Alexander Review, which has advocated for the improvement of boardroom diversity to improve governance effectiveness. The study also establishes that ownership structures are key drivers of leverage decisions. Managerial ownership and institutional shareholding are found to be associated with financial leverage, and thus equity ownership is important in the coordination of stakeholder interests and the mitigation of agency costs. It is argued that institutional investors are key in the moderation of risk-taking behaviour, particularly during the COVID-19 pandemic and Brexit-related uncertainties.
Conversely, government shareholding is associated with a more conservative leverage policy, given that state-owned firms focus on financial stability. On the other hand, the study failed to establish a clear association between board size and leverage, or between the proportion of non-executive directors and leverage. Although theory holds that larger boards or more independent directors would enhance governance and oversight, the results of this study indicate that in the UK, these factors may not be important for financial decision-making. This could be ascribed to legal restrictions on board size and the low levels of non-executive directors’ engagement in financial governance.

6.1. Theoretical Implications

Our study contributes to the literature by demonstrating how Pecking Order Theory, Trade-off Theory, and Agency Theory offer complementary yet distinct frameworks for understanding the influence of gender diversity on corporate leverage decisions. While previous research has explored aspects of this relationship (see Elmarzouky et al., 2024), we extend these theoretical insights by situating our analysis within the distinct post-Brexit UK regulatory context. This setting enables a nuanced examination of how gender diversity interacts with capital structure decisions in an evolving institutional and governance environment. By integrating these theoretical perspectives within a contemporary and underexplored context, our findings offer a more holistic understanding of the mechanisms through which board diversity may shape financial decision-making.
In the governance-sustainability-finance nexus debate, this study adds to the conversation by examining these governance and ownership dimensions within the UK corporate sector. Furthermore, firm size, profitability, growth, and tangibility are all found to significantly affect the traditional determinants of capital structure as well. Firm size is positively associated with total debt and long-term debt, but has a weak positive association with short-term debt. Profitability is positively associated with total debt and short-term debt, while its negative, but insignificant, relationship with long-term debt is a problem for the Pecking Order Theory.
This study extends existing theoretical frameworks by situating the relationship between board gender diversity and financial leverage within a specific institutional context—the United Kingdom during a period of significant regulatory and socio-political transformation. While prior research has established the governance benefits of gender-diverse boards, our findings contribute to theory by illustrating how national-level institutional changes, such as the Hampton-Alexander Review and the broader post-Brexit corporate governance landscape, may interact with internal governance mechanisms. Drawing on the concept of institutional complementarity, we suggest that external governance pressures can amplify or shape the effectiveness of board diversity in influencing financial decisions. This perspective enhances our understanding of how macro-level regulatory and cultural shifts influence firm behaviour, offering a more dynamic and context-sensitive view of corporate governance theory. Thus, the study not only confirms existing governance relationships but also contributes to the evolving theoretical discourse on the interplay between institutional environments and board-level attributes.

6.2. Managerial Implications

These findings are significant for UK firms and policy makers; for instance, the Financial Reporting Council should continue to encourage diversity and active board participation and develop further guidance on board size and composition to enhance their contribution to financial governance. Institutional investors and government stakeholders should use their position to enforce financial constraints, especially during periods of economic instability. Furthermore, boards should consider management equity ownership as a way of ensuring that management is compensated in the same way as shareholders to ensure the stability of financial decisions.

6.3. Limitations

While the implementation of instrumental variable techniques is a valuable suggestion, it would require a substantial redesign of the data collection process and theoretical framing. Future work may extend the analysis of the governance-leverage relationships to sectoral levels, especially for companies in different capital-intensive and risky industries. Future research could build on this study by exploring heterogeneity across factors such as industry, firm size, or ownership concentration to better understand how these variables influence the relationship between gender diversity and financial leverage. Additionally, examining interaction terms, gender and ownership structure, could provide deeper insights into how governance and ownership characteristics jointly impact financial decision-making. These avenues would offer a more nuanced perspective on the role of gender diversity in corporate finance. Longitudinal research on the effects of changing regulations, for instance, the changes in the UK Corporate Governance Code, would be useful to understand the changes in governance dynamics. Also, the analysis of the moderating role of external shocks, including economic crises or recovery, may give more insight into the robustness of governance systems in determining financial policies. In conclusion, this study establishes that governance and ownership structures are critical determinants of financial leverage in UK firms. By examining these dynamics and the role of gender diversity in the boardroom in particular, the research makes theoretical and practical contributions to the enhancement of governance strategies and financial performance in the UK corporate sector.

Author Contributions

Conceptualization, D.A., F.A. and J.J.; methodology, D.A., F.A. and J.J.; software, F.A.; validation, F.A., J.J.; formal analysis, D.A.; investigation, D.A.; resources, F.A.; data curation, D.A.; writing—original draft preparation, D.A.; writing—review and editing, F.A., J.J.; supervision, F.A., J.J.; project administration, F.A., J.J. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

Data is contained within the article.

Conflicts of Interest

The authors declare that there are no conflicts of interest.

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Table 1. Summary of descriptive statistics.
Table 1. Summary of descriptive statistics.
VariableObsMeanStd. Dev.MinMax
TDA43560.34908811.078288056.00443
LTDA43540.40100650.3003272−0.39481311.30103
STDA43470.2836990.1980015−0.30481312.331333
BSIZE43561.0317490.08514970.698971.380211
N_EXEC43569.6643712.085614422
CEO_DUAL43560.06106520.239477401
G_DIV43560.3318750.261626702.333333
M_OWN43560.52240154.289648−0.264813162.62
I_OWN43560.19593520.2220452−0.34571433.94
G_OWN43560.0679840.1243015−0.29481313.131
FSIZE43564.3308730.65278940.36.573286
ROA43560.08091930.1137497−0.43787990.999846
GROW43560.82227670.5154442−1.0981523.173286
TANG43560.20092541.330859−0.584.5
Table 2. Pearson correlation matrix.
Table 2. Pearson correlation matrix.
TDALTDASTDABSIZENEXECCEO_DUALG_DIVM_OWNI_OWNG_OWNFSIZEROAGROWTANG
TDA1.0000
LTDA−0.02981.0000
STDA−0.02590.52271.0000
BSIZE−0.00140.00270.01331.0000
N_EXEC0.00250.01380.01790.93851.0000
CEO_DUAL−0.00640.07710.01930.02210.02711.0000
G_DIV0.0732−0.0284−0.03910.01870.0428−0.00371.0000
M_OWN−0.00160.08540.03050.02850.01670.02670.01391.0000
I_OWN−0.0061−0.05980.02560.00630.0028−0.0125−0.0428−0.00491.0000
G_OWN0.0115−0.5220−0.25420.03970.0275−0.0556−0.0116−0.02070.12151.0000
FSIZE−0.10490.0224−0.00340.48860.49700.01080.04730.0096−0.02350.00111.0000
ROA−0.0077−0.00200.0010−0.0687−0.07790.00710.3485−0.01660.0016−0.0006−0.18851.0000
GROW0.00070.13660.0918−0.1040−0.08750.0482−0.0170−0.02800.0864−0.0601−0.1025−0.00641.0000
TANG−0.00080.04150.03780.01260.0178−0.00280.0004−0.00090.0051−0.02720.00760.00770.02231.0000
Table 3. Nexus between governance structure, ownership structure, financial leverage and firm performance.
Table 3. Nexus between governance structure, ownership structure, financial leverage and firm performance.
(1)(2)(3)
TDALTDASTDA
BSIZE0.224−0.09550.00667
(0.686)(0.467)(0.946)
N_EXEC0.02810.007200.00332
(0.217)(0.181)(0.414)
CEO_DUAL−0.02150.0495 ***0.000178
(0.751)(0.002)(0.988)
G_DIV0.418 ***−0.0514 ***−0.0356 ***
(0.000)(0.001)(0.003)
M_OWN−0.0009920.00540 ***0.00129 *
(0.793)(0.000)(0.056)
I_OWN−0.0316−0.01210.0427 ***
(0.668)(0.487)(0.001)
G_OWN0.0918−1.233 ***−0.407 ***
(0.486)(0.000)(0.000)
FSIZE−0.262 ***0.0126 *−0.00236
(0.000)(0.070)(0.653)
ROA−0.643 ***0.05740.0336
(0.000)(0.120)(0.227)
GROW−0.01400.0650 ***0.0286 ***
(0.660)(0.000)(0.000)
TANG0.0001190.00551 *0.00419 *
(0.992)(0.056)(0.053)
LIQ−0.175 **0.00690 *−0.0157 *
(0.015)(0.070)(0.053)
BETA (Risk)0.102 *0.0451 *0.0285 *
(0.053)(0.066)(0.072)
Constant0.701 **0.382 ***0.221 ***
(0.018)(0.000)(0.000)
N435643544347
R20.04250.3150.0921
F12.66175.438.47
p1.01 × 10−2207.88 × 10−77
Table 4. Fixed effects regression (firm and year).
Table 4. Fixed effects regression (firm and year).
VariableTDA (Fixed Effects)LTDA (Fixed Effects)STDA (Fixed Effects)
BSIZE0.113 (0.415)−0.053 (0.378)0.002 (0.851)
CEO_DUAL−0.015 (0.622)0.039 ** (0.010)0.001 (0.980)
G_DIV0.390 *** (0.000)−0.042 *** (0.000)−0.030 *** (0.001)
Firm FEYesYesYes
Year FEYesYesYes
N435643544347
R2 (Within)0.120.320.09
Table 5. IV-2SLS results (using industry-avg leverage as instrument).
Table 5. IV-2SLS results (using industry-avg leverage as instrument).
VariableFirst Stage (Leverage)Second Stage (TDA)
Industry-Avg Leverage0.623 *** (0.000)
Predicted Leverage0.377 *** (0.001)
Cragg-Donald F-stat35.8
Cragg-Donald F-stat0.231Yes
Hansen J-test p-value43004300
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MDPI and ACS Style

Angsoyiri, D.; Alkaraan, F.; John, J. Governance, Ownership Structure, and Financial Leverage: The Role of Board Gender Diversity in UK Firms. J. Risk Financial Manag. 2025, 18, 276. https://doi.org/10.3390/jrfm18050276

AMA Style

Angsoyiri D, Alkaraan F, John J. Governance, Ownership Structure, and Financial Leverage: The Role of Board Gender Diversity in UK Firms. Journal of Risk and Financial Management. 2025; 18(5):276. https://doi.org/10.3390/jrfm18050276

Chicago/Turabian Style

Angsoyiri, Dramani, Fadi Alkaraan, and Judith John. 2025. "Governance, Ownership Structure, and Financial Leverage: The Role of Board Gender Diversity in UK Firms" Journal of Risk and Financial Management 18, no. 5: 276. https://doi.org/10.3390/jrfm18050276

APA Style

Angsoyiri, D., Alkaraan, F., & John, J. (2025). Governance, Ownership Structure, and Financial Leverage: The Role of Board Gender Diversity in UK Firms. Journal of Risk and Financial Management, 18(5), 276. https://doi.org/10.3390/jrfm18050276

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