Corporate Governance, Sovereign Rating, Leverage and Firm Performance:
an Analysis at the Regional Level
DOI:
https://doi.org/10.20401/rasi.9.1.669Keywords:
Corporate Governance, Leverage, Sovereign Rating, Performance, RegionalityAbstract
This paper analyzed, in a regional dimension, the effects of corporate governance and sovereign rating on the leverage and performance of Brazilian companies. We used a panel data regression in a sample of 671 Brazilian companies listed on the Bolsa Brasil Balcão – B3 between 2010 and 2018. We explore the behavior of leverage and performance of firms operating in the Triângulo Mineiro and Alto Paranaíba and Sul de Goiás Region - TMAP and their peers that do not have activities in that region. For the regional level, the sample was divided in companies that have headquarters, branches, or subsidiaries in the mesoregions of Triângulo Mineiro, Alto Paranaíba and the south of Goiás - TMAP. The results showed that companies operating in TMAP and in the south of Goiás are more leveraged when they are audited by at least one of the four auditing firms – Big4 and when there is an outsider on the board of directors, on the other hand, leverage decreases when the board of directors is large and when there is concentration of ownership and control. Regarding performance, it was noticed that for these companies, the return on assets is positively influenced by the audit's reputation and the presence of outsiders on the board, while the dual role of CEO and chairman destroys Tobin's Q.
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