Corporate Governance, Capital Structure and Financial Performance of Petroleum Companies in South Sudan

Authors

Keywords:

Return on Equity, Capital Structure, Corporate governance, Return on Assets

Abstract

Background: Capital structure and corporate governance are critical determinants of firm value and wealth maximization. Effective corporate governance mechanisms enhance investor confidence by assuring shareholders of accountability, transparency, and prudent utilization of their investments. Conversely, excessive financial leverage may reduce firm value by increasing the risk of insolvency and financial distress. This study examined the relationship between corporate governance, capital structure, and financial performance among firms operating in South Sudan’s petroleum sector.

 

Methods: The study adopted a positivist research philosophy and employed an exploratory and deductive research design. Quantitative data analysis techniques grounded in statistical modeling were utilized. Descriptive statistics, correlation analysis, and linear regression models were applied to analyze the relationships among the study variables and to draw conclusions.

 

Results: The empirical findings revealed that the long-term debt ratio (LTDR) had a significant inverse relationship with return on assets (ROA), indicating that higher levels of long-term debt negatively affected firm performance. Similarly, the short-term debt ratio (STDR) demonstrated a negative association with financial performance. The study identified LTDR and STDR as key determinants of capital structure decisions, while corporate governance practices served as explanatory variables. Furthermore, the findings showed that board size and the number of shareholders had insignificant relationships with ROA. Correlation results indicated the absence of strong multicollinearity among the independent variables.

Conclusion: The study concluded that capital structure significantly influences the financial performance of petroleum firms in South Sudan. Specifically, increased reliance on long-term and short-term debt financing was associated with lower firm performance. In contrast, certain corporate governance indicators, including board size and shareholder composition, showed limited influence on ROA. The regression analysis further demonstrated that some independent variables were statistically insignificant at the 0.05 significance level, leading to the rejection of selected null hypotheses. The study recommends that petroleum firms adopt prudent debt management strategies and strengthen corporate governance frameworks to enhance financial performance and sustainability.

References

Alili, A., & Krstev, D. (2019). Using SPSS for research and data analysis. Knowledge–International Journal, 32(3).

Ali Shah, S. Z., & Butt, S. A. (2009). The impact of corporate governance on the cost of equity: empirical evidence from Pakistani listed companies. The Lahore Journal of Economics, 14(1), 139-171.

Boyd, B. K. (1994). Board control and CEO compensation. Strategic management journal, 15(5), 335-344.

Butzbach, O., & Sarno, D. (2019). To What Extent Do Regional Effects Influence Firms’ Capital Structure? The Case of Southern Italian SMEs’. International Journal of Financial Studies, 7(1), 3.

Cadbury, A. (1992). Report of the Committee on the financial aspects of Corporate Governance, Gee & Co. Ltd., London, United Kingdom.

Craig, V. V. (2005). The Changing Corporate Governance Environment: Implications for the Banking Industry. FDIC Banking Review. Page 1-15

Driss, H., Drobetz, W., El Ghoul, S., & Guedhami, O. (2021). Institutional investment horizons, corporate governance, and credit ratings: International evidence. Journal of Corporate Finance, 67, 101874.

Frank, M. Z., & Goyal, V. K. (2009). Capital structure decisions: which factors are reliably important?. Financial management, 38(1), 1-37.

Javaid, A., Nazir, M. S., & Fatima, K. (2023). Impact of corporate governance on capital structure: mediating role of cost of capital. Journal of Economic and Administrative Sciences, 39(4), 760-780.

Keasey, K., & Wright, M. (1993). Issues in corporate accountability and governance: An editorial. Accounting and business research, 23(sup1), 291-303.

Kieschnick, R., & Moussawi, R. (2018). Firm age, corporate governance, and capital structure choices. Journal of corporate finance, 48, 597-614.

Li, H., Terjesen, S., & Umans, T. (2020). Corporate governance in entrepreneurial firms: a systematic review and research agenda. Small Business Economics, 54(1), 43-74.

Hair Jr, J., Page, M., & Brunsveld, N. (2019). Essentials of business research methods. Routledge.

Matias, F., & Serrasqueiro, Z. (2017). Are there reliable determinant factors of capital structure decisions? Empirical study of SMEs in different regions of Portugal. Research in International Business and Finance, 40, 19-33.

Mukhtaruddin, M., Ubaidillah, U., Dewi, K., Hakiki, A., & Nopriyanto, N. (2019). Good corporate governance, corporate social responsibility, firm value, and financial performance as moderating variable. Indonesian Journal of Sustainability Accounting and Management, 3(1), 55â-64.

Myers, Stewart C., and Nicholas S. Majluf. "Corporate financing and investment decisions when firms have information that investors do not have." Journal of financial economics 13, no. 2 (1984): 187-221.

Pallant, J. (2020). SPSS survival manual: A step by step guide to data analysis using IBM SPSS. McGraw-hill education (UK).

Pucheta-Martínez, M. C., & Gallego-Álvarez, I. (2020). Do board characteristics drive firm performance? An international perspective. Review of Managerial Science, 14(6), 1251-1297.

Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. The journal of Finance, 50(5), 1421-1460.

Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The journal of finance, 52(2), 737-783.

Solomon, J. (2020). Corporate governance and accountability. John Wiley & Sons..

Svanberg, J., Ardeshiri, T., Samsten, I., Öhman, P., Neidermeyer, P. E., Rana, T., ... & Danielson, M. (2022). Corporate governance performance ratings with machine learning. Intelligent Systems in Accounting, Finance and Management, 29(1), 50-68.

Swain, K. R. (2020). Corporate Governance and Agency Theory: An Analysis of Literature. Manthan: Journal of Commerce & Management, 7(2).

Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of financial economics, 40(2), 185-211.

Zattoni, A., Dedoulis, E., Leventis, S., & Van Ees, H. (2020). Corporate governance and institutions—A review and research agenda. Corporate Governance: An International Review, 28(6), 465-487.

Downloads

Published

27-05-2026

Issue

Vol. 2 No. 1 (2026)

Section

RESEARCH ARTICLE

Categories

License

Copyright (c) 2026 Emmanuel Asilaza, Nick Croft, David Duffill (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Public License Terms

1. License Overview

All articles published by Scholarly Research Publications are made available under the Creative Commons Attribution 4.0 International License (CC BY 4.0).

This license permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are properly credited.

2. Rights Granted to Users

Under the CC BY 4.0 license, users are free to:

  • Share — copy and redistribute the material in any medium or format

  • Adapt — remix, transform, and build upon the material for any purpose, including commercial use

These rights are granted without the need for additional permission, provided proper attribution is given.

3. Attribution Requirements

Users must give appropriate credit by:

  • Citing the author(s) name(s)

  • Providing the title of the work

  • Including the journal name (Scholarly Research Publications)

  • Providing a link to the original publication

  • Indicating if changes were made

Attribution must not suggest endorsement by the author(s) or the publisher.

4. Author Rights

Authors retain full copyright of their work.

By submitting and publishing with Scholarly Research Publications, authors grant the journal the right to:

  • Publish and distribute the article

  • Identify itself as the original publisher

Authors are free to:

  • Share their work (e.g., institutional repositories, personal websites)

  • Reuse their work in future publications with proper citation

5. Third-Party Material

If any material included in the article (e.g., images, data, figures) is not covered by the CC BY 4.0 license, this will be clearly indicated.

Users must obtain permission from the respective copyright holders for such materials.

6. No Additional Restrictions

No additional legal or technological restrictions may be applied that would limit others from exercising the rights granted under this license.

7. Disclaimer

The publisher makes no warranties regarding the use of the published material and is not liable for any misuse or misinterpretation of the content.

8. License Link

For full details of the license, please visit:

https://creativecommons.org/licenses/by/4.0/

How to Cite

Asilaza, E., Croft, N., & Duffill, D. (2026). Corporate Governance, Capital Structure and Financial Performance of Petroleum Companies in South Sudan. Scholarly Journal of Business and Management Studies, 2(1). https://scholarlyresearchpublications.org/SJBMS/article/view/9