This study explores the interaction between corporate governance structures and capital 
structure of Ghanaian SMEs based on a sample of 150SMEs drawn from the Association 
of Ghanaian Industries’ database of firms and that of the National Board for Small Scale 
Industries. The selection of sample was based on criteria set by Regional Project on 
Enterprise Development (RPED) for SMEs in Ghana. That means firms with employee 
size of less than 100 were included in the study sample. The data was derived from the 
financial statements of these firms during a six-year period, 1998 – 2003. Information on 
board members was obtained through interviews from the management of the firms. The 
study employs a panel data model used by Wen et al(2002) with some modifications. 
This takes the following form: