Interactions between corporate governance, bankruptcy law and firms' debt financing: the Brazilian case

Funchal, Bruno; Galdi, Fernando Caio; Lopes, Alexsandro Broedel

doi:10.1590/s1807-76922008000300006

Cited by 9 publications

(11 citation statements)

References 4 publications

(3 reference statements)

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“…We measure company size, SIZE, as the log of total assets (Sengupta, 1998; Pittman and Fortin, 2004) which is expected to be negatively related to debt cost. Finally, prior studies indicate the importance of the company’s industry in determining the access to debt and cost of debt (Funchal et al. , 2008).…”

Section: Empirical Testsmentioning

confidence: 99%

Does adopting good corporate governance impact the cost of intermediated and non‐intermediated debt?

Aldamen

Duncan

2011

Accounting & Finance

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This study examines the impact of good corporate governance practices on the reported cost of debt for Australian listed companies. Prior research has established that governance lowers the cost of non-intermediated debt (Sengupta, 1998;Bhojraj and Sengupta, 2003;Ashbaugh-Skaife et al., 2006). We extend this analysis to the Australian corporate debt market which is dominated by intermediated or privately held debt. Our findings are consistent with the prior work and shows that increased corporate governance lowers cost of debt. However, when we split the sample companies into intermediated and non-intermediated debt sub-samples, we find this result only holds for the non-intermediated debt sub-sample. Furthermore, we find that small companies that adopt better corporate governance practices do not benefit through lower cost of debt. This raises questions about the merits of universal adoption of costly governance practices.

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Section: Empirical Testsmentioning

confidence: 99%

Does adopting good corporate governance impact the cost of intermediated and non‐intermediated debt?

Aldamen

Duncan

2011

Accounting & Finance

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“…Funchal et al (2008) find that companies with higher levels of corporate governance have higher leverage and lower cost of debt. Abor (2007) examines the relationship between corporate governance and capital structure decisions for Ghanaian companies and finds a positive relationship between debt levels and corporate governance practices.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 92%

Corporate governance and access to interest bearing debt

Aldamen

Duncan

2012

Journal of Financial Reporting and Accounting

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Purpose -We extend the growing body of literature on the impact of corporate governance on debt contracting by examining if better governance is associated with access to interest bearing debt. We explore if no-debt companies have governance structures that are qualitatively different to debt companies within a market with distinct corporate finance structure such as Australia. Design/methodology/approach -The analysis is portioned into two stages. The first stage focuses on univariate analysis which includes descriptive statistics and analysis of variance (ANOVA). The second stage introduces multivariate analysis, in the form of a probit regression model, to test the relationship between corporate governance and access to interest bearing debt. Findings -The results suggest that companies with higher levels of corporate governance are more likely to access interest bearing debt relative to no-debt companies. We also find that resource companies with no-debt have systematically lower governance than all other companies. As a result only those resource companies that implement higher governance are more likely to access interest bearing debt. Research limitations/implications -The cross sectional design of the study is limited in its ability to shed light on the question of causality. One potential avenue for future work is to develop an event study around the timing of governance and debt access changes. Originality/value -The current study contributes to the extant literature by investigating the relationship between governance and access to interest bearing debt in the understudied Australian debt market.

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“…Considerando aspectos ao nível do país, Rogers et al (2007) identificam que melhores práticas de governança tendem a diminuir os impactos de variações de variáveis macroeconômicas nos retornos de ações, enquanto Funchal et al (2008) sugerem que uma melhor governança e leis de falência mais rigorosas possuem efeito positivo no endividamento.…”

Section: Referencial Teóricounclassified

Estudo da influência da governança corporativa e do ambiente institucional dos países na lucratividade das empresas

Bottin¹,

Étienne²,

Verté³

et al. 2012

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A governança das corporações pode impactar o desempenho de empresas. Porém, ambientes institucionais e regras de governança dos países também podem influenciar, pelo menos indiretamente, características das firmas. Nesse contexto, esta pesquisa tem por objetivo investigar a relevância de variáveis de um país, particularmente, de variáveis associadas à governança, na lucratividade de empresas. Por meio de análise de regressão em dois níveis, buscase identificar (i) como variáveis específicas da empresa afetam diretamente seu desempenho e (ii) como variáveis de um país impactam indiretamente a lucratividade de firmas. Com base em 17.493 empresas de 38 países, estabelece-se que: (i) os níveis de burocracia, corrupção e imposição da lei de um país não são relevantes para a lucratividade de uma empresa, (ii) o grau de competitividade de um país tem influência indireta no desempenho corporativo, afetando a sensibilidade da lucratividade às dificuldades financeiras de empresas e ao dinamismo de setores, (iii) a assimetria informacional ligada à falta de disclosure sobre lucros e salários influencia a sensibilidade da lucratividade às dificuldades financeiras e (iv) a proteção ao credor pode afetar a sensibilidade da lucratividade ao grau de tangibilidade da empresa, uma vez que ativos fixos, mais tangíveis, podem servir de garantia para empréstimos.Palavras-chave: ambiente institucional, governança corporativa, lucratividade de empresas. ABSTRACTCorporate governance may affect firm performance. However, institutional environment and governance rules of different countries may also influence, at least indirectly, characteristics of companies. In this context, the objective of this investigation is to study the relevance of country-level variables, particularly those related to governance, on firm profitability. Through a two-level regression analysis, we aim to identify (i) how firm-specific variables directly impact performance of companies and (ii) how country-specific variables indirectly affect firm profitability. Using a sample of 17,493 companies from 38 countries, the results suggest that: (i) bureaucracy, corruption and law enforcement of a country are not relevant to firm profitability, (ii) competitiveness in a country has indirect influence on performance, since it influences the

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Interactions between corporate governance, bankruptcy law and firms' debt financing: the Brazilian case

Cited by 9 publications

References 4 publications

Does adopting good corporate governance impact the cost of intermediated and non‐intermediated debt?

Does adopting good corporate governance impact the cost of intermediated and non‐intermediated debt?

Corporate governance and access to interest bearing debt

Estudo da influência da governança corporativa e do ambiente institucional dos países na lucratividade das empresas

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