The Corporate Governance Characteristics versus Capital Structure of Portuguese Companies
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Published:
Nov 27, 2022
Keywords:
Capital Structure Corporate Governance Duality CEO/Chairman Leverage
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Abstract
This study analyzes the relationship between Corporate Governance and the level of leverage of Portuguese companies. The sample consists in 9,170 Portuguese non-financial companies corresponding to 100,870 observations, over a period from 2008 to 2018. The data for this study were collected by consulting the SABI database and were analyzed using random effects regression models, considering the data model in panel, by using the integrated development software program for R – RStudio, version 1.2.5001. The analysis of the results provides evidence that Corporate Governance influence the choice of capital structure of Portuguese companies.
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Santos de Oliveira, H. M., Tavares Martins, C. I., Couto Ribeiro, M. C., Pereira, M., & Sousa Lima, A. F. (2022). The Corporate Governance Characteristics versus Capital Structure of Portuguese Companies. E3 — Revista De Economia, Empresas E Empreendedores Na CPLP, 8(2), 005–025. https://doi.org/10.29073/e3.v8i2.508
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This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Akdal, S. (2011). How do Firm Characteristics Affect Capital Structure? Some UK Evidence. Londres: Kingston University.
Armstrong, C., Guay, W. & Weber, J. (2010). The role of information and financial reporting in corporate governance and debt contracting. Journal of Accounting and Economics, 50, 179-234. https://doi.org/10.1016/j.jacceco.2010.10.001.
Baker, M. & Wurgler, J. (2002). Market timing and capital structure. The Journal of Finance, 57, 1-32. https://doi.org/10.1111/1540-6261.00414.
Bastos, D. & Nakamura, W. (2009). Determinantes da estrutura de capital das companhias abertas no Brasil, México e Chile no período 2001-2006. Revista Contabilidade & Finanças, 20, 75-94.
Baysinger, B. & Butler, H. (1985). Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition. Journal of Law, Economics and Organization; 1(1), 101-124.
Berger, P., Ofek, E. & Yermack, D. (1997). Managerial Entrenchment and Capital Structure Decisions. The Journal of Finance, 52(4), 1411-1438. https://doi.org/10.1111/j.1540-6261.1997.tb01115.x.
Berle, A. & Means, G. (1932). The Modern Corporation and Private Property. S. Paulo: Nova Cultural: Colecção Economistas.
Bradshaw, M., Bushee, B. & Miller, G. (2004). Accounting Choice, Home Bias, and U.S. Investment in Non-US Firms. Journal of Accounting Research, 42. https://doi.org/10.1111/j.1475-679X.2004.00157.x.
Brickley, J., Coles, J. & Jarrell, G. (1997). Leadership structure: Separating the CEO and Chairman of the Board. Journal of Corporate Finance, 3, 189-220. https://doi.org/10.1016/S0929-1199(96)00013-2.
Brito, R. & Lima, M. (2005). A escolha da estrutura de capital sob fraca garantia legal: o caso do Brasil. Revista Brasileira de Economia, 59(2), 177-208. https://doi.org/10.1590/S0034-71402005000200002.
Chen, W. P., Chung, H., Hsu, T. L., & Wu, S. (2010). External financing needs, corporate governance, and firm value. Corporate Governance: An International Review, 18, 234-249. https://doi.org/10.1111/j.1467-8683.2010.00801.x.
Chen, Y., Chou, R. & Huang, T. (2015). Corporate governance, product market competition and dynamic capital structure. International Review of Economics and Finance, 38, 44-55. https://doi.org/10.1016/j.iref.2014.12.013.
Crisóstomo, V. & Pinheiro, B. (2016). Estrutura de Capital e Concentração de Propriedade da empresa brasileira. Revista de Finanças Aplicadas.
Delgado-Garcia, J., Quevedo-Puente, E. & Diez-Esteban, J. (2013). The Impact of Corporate Reputation on Firm Risk: A Panel Data Analysis of Spanish Quoted Firms. British Journal of Management. https://doi.org/10.1111/j.1467-8551.2011.00782.x.
Demsetz, H. & Villalonga, B. (2001). Ownership Structure and Corporate Performance; Journal of Corporate Finance; 7,209-233.
Detthamrong, U., Chancharat, N. & Vithessonthi, C. (2016). Corporate governance, capital structure and firm performance: evidence from Thailand. Research in International Business and Finance, 42, 689-709. https://doi.org/10.1016/j.ribaf.2017.07.011.
Fama, E. & Jensen, M. (1983). Agency problems and residual claims. Journal of Law & Economics, XXVI.
Fonseca, C., Silveira, R. & Hiratuka, C. (2016). A Relação entre a Governança Corporativa e a Estrutura de Capital das Empresas Brasileiras no Período 2000-2013. Enfoque: Reflexão Contábil, 35(2), 35-52. https://doi.org/10.4025/enfoque.v35i2.29673.
Fosberg, R. (2004). Agency problems and debt financing: leadership structure effects. Corporate Governance, 4, 31-38. https://doi.org/10.1108/14720700410521943.
Frank, M. & Goyal, V. (2007). Capital Structure Decisions: Which Factors Are Reliably Important? Financial Management, 38(1), 1-37. https://doi.org/10.1111/j.1755-053X.2009.01026.x.
Friend, I. & Lang, L. (1988). An Empirical Test of the Impact of Managerial Self-Interest on Corporate Capital Structure. The Journal of Finance, 43(2), 271-281.
Garvey, G. & Hanka, G. (1999). Capital Structure and Corporate Control: The Effect of Antitakeover Statutes on Firm Leverage. The Journal of Finance, 54(2), 519-545. https://doi.org/10.1111/0022-1082.00116.
Gaud, P., Jani, E., Hoesli, M. & Bender, A. (2003). The Capital Structure of Swiss Companies: An Empirical Analysis Using Dynamic Panel Data. Genebra: The International Center for Financial Asset Management and Engineering.
Harris, M. & Raviv, A. (1991). The Theory of Capital Structure. The Journal of Finance, 46(1), 297-355. https://doi.org/10.1111/j.1540-6261.1991.tb03753.x.
Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76, 323-329.
Jensen, M. & Meckling, W. (1976). Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X.
Jorge, S. & Armada, M. (2001). Factores Determinantes do Endividamento: Uma Análise em Painel. Revista de Administração Contemporânea, 5(2), 9-31. https://doi.org/10.1590/S1415-65552001000200002.
Kayhan, A. (2008). Managerial Discretion and the Capital Structure Dynamics. Louisiana State University.
Kyereboah-Coleman, A. & Biekpe, N. (2008). The Relationship Between Board Size, Board Composition, CEO Duality and Firm Performance: Experience from Ghana. Corporate Ownership and Control, 4. https://doi.org/10.22495/cocv4i2p11.
La Porta, R.; Lopez-de-Silanes, F.; Shleifer, A. & Vishny, R. (2000). Investor Protection and Corporate Governance. Journal of Financial Economics, 58 (1-2), 3-27.
Larcker, D., Richardson, S. & Tuna, Í. (2004). Does Corporate Governance Really Matter? University of Pennsylvania, Philadelphia. http:// doi.org/10.1.1.180.1479&rep=rep1&type=pdf.
Liao, L., Mukherjee, T. & Wang, W. (2015). Corporate governance and capital structure dynamics: an empirical study. The Journal of Financial Research, 38, 169-191. https://doi.org/10.1111/.
Lizcano Álvarez, J. (2013). El Valor de la Transparencia en las Instituciones Públicas y las Empresas. Barcelona: ACCID – Revista de Contabilidad y Dirección, 16, pp. 109-125.
Miguel, A. & Pindado, J. (2001). Determinants of capital structure: new evidence from Spanish panel data. Journal of Corporate Finance, 7(1), 77-99. https://doi.org/10.1016/S0929-1199(00)00020-1.
Modigliani, F. & Miller, M. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48, 261-297.
Monteiro, T. (2019). Governo das Sociedads em Portugal. Estudo sobre as empresas que compõem o PSI-20. Tese de Mestrado, Católica Porto Business School, Porto.
Myers, S. (1984). The capital structure puzzle. The Journal of Finance, 39, 575-592. https://doi.org/10.2307/2327916.
Myers, S. & Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187-221. https://doi.org/10.1016/0304-405X(84)90023-0.
Ntoung, L., Santos de Oliveira, H., Sousa, B., Pimentel, L. & Bastos, S. (2020). Are Family Firms Financially Healthier Than Non-Family Firm? Journal of Risk and Financial Management, 13. https://doi.org/10.3390/jrfm13010005.
Ntoung, L., Vila Biglieri, J., Santos de Oliveira, H., Ferreira de Sousa, B., Outman, B. & Masárová, E. (2017). The impact of ownership structure on firm performance: The role of chairman and CEO in Portugal. Corporate Board: Role, Duties & Composition, 13. http://doi.org/10.22495/cbv13i2art1.
Oliveira, H. M. S. (2015). A Estrutura Conceptual da Informação Financeira e o Governo das Sociedades: Análise da Relação entre as Caraterísticas das Empresas Cotadas em Portugal e a Informação Divulgada. España: Universidad de Vigo, Faculdad de Ciencias Economicas y Empresariales. Tesis Doctoral
Oulhim, A. (2019). The Impact of Corporate Governance on Capital Structutre. Universidade do Algarve, Faculdade de Economia.
Pinheiro, B., Vasconcelos, A., Luca, M. & Crisóstomo, V. (2017). Estrutura de Capital e Governança Corporativa nas Empresas Listadas na BMFBovespa. Jounal os Education and Research in Accounting, 451-466. https://doi.org/10.17524/repec.v11i4.1706.
Rajan, R. & Zingales, L. (1995). What Do We Know about Capital Structure? Some Evidence from International Data. The Journal of Finance, 50(5), 1421-1460. https://doi.org/10.1111/j.1540-6261.1995.tb05184.x.
Semedo, I. (2015). Teorias da estrutura de capital das empresas :Uma aplicação às empresas Portuguesas cotadas na Euronext Lisboa. Lisboa: Instituto Superior de Gestão.
Serens, M. (2021). Código das Sociedades Comerciais. Coimbra: Edições Almedina, 36th Edição, Reimpressão.
Sheikh, A. & Wang, Z. (2012). Effects of corporate governance on capital structure: empirical evidence from Pakistan. Corporate Governance, 12, 629-641. https://doi.org/10.1108/14720701211275569.
Silva, D. (2009). O Impacto do Corporate Governance na Estrutura de Capitais. Faculdade de Economia da Universidade do Porto, Porto.
Silveira, A., Perobelli, F. & Barros, L. (2008). Governança corporativa e os determinantes da estrutura de capital: evidências empíricas no Brasil. Revista de Administração Contemporânea, 12, 763-788. https://doi.org/10.1590/S1415-65552008000300008.
Smith, A. (1775). Inquérito sobre a Natureza e as Causas da Riqueza das Nações. Fundação Calouste Gulbenkian, Vol. II, Edição de 1981
Tavares, F. (2017). A Estrutura de Capital das Empresas e as Decisões de Financiamento. Universidade Portucalense, Porto.
Titman, S. & Wessels, R. (1988). The Determinants of Capital Structure Choice. The Journal of Finance, 43(1), 1-19. https://doi.org/10.1111/j.1540-6261.1988.tb02585.x.
Toy, N., Stonehill, A., Remmers, L., Wright, R. & Beekhuisen, T. (1974). A Comparative International Study of Growth, Profitability, and Risk as Determinants of Corporate Debt Ratios in the Manufacturing Sector. The Journal of Financial and Quantitative Analysis, 9(5), 875-886. https://doi.org/10.2307/2329684.
Vieira, K., Velasquez, M., Losekann, V. & Ceretta, P. (2011). A influência da governança corporativa no desempenho e na estrutura de capital das empresas listadas na Bovespa. Revista Universo Contábil, 7, 49-67. https://doi.org/10.4270/ruc.2011104.
SNC - Sistema de Normalização Contabilística, Decreto-Lei n.º 98/2015 de Junho.
Armstrong, C., Guay, W. & Weber, J. (2010). The role of information and financial reporting in corporate governance and debt contracting. Journal of Accounting and Economics, 50, 179-234. https://doi.org/10.1016/j.jacceco.2010.10.001.
Baker, M. & Wurgler, J. (2002). Market timing and capital structure. The Journal of Finance, 57, 1-32. https://doi.org/10.1111/1540-6261.00414.
Bastos, D. & Nakamura, W. (2009). Determinantes da estrutura de capital das companhias abertas no Brasil, México e Chile no período 2001-2006. Revista Contabilidade & Finanças, 20, 75-94.
Baysinger, B. & Butler, H. (1985). Corporate Governance and the Board of Directors: Performance Effects of Changes in Board Composition. Journal of Law, Economics and Organization; 1(1), 101-124.
Berger, P., Ofek, E. & Yermack, D. (1997). Managerial Entrenchment and Capital Structure Decisions. The Journal of Finance, 52(4), 1411-1438. https://doi.org/10.1111/j.1540-6261.1997.tb01115.x.
Berle, A. & Means, G. (1932). The Modern Corporation and Private Property. S. Paulo: Nova Cultural: Colecção Economistas.
Bradshaw, M., Bushee, B. & Miller, G. (2004). Accounting Choice, Home Bias, and U.S. Investment in Non-US Firms. Journal of Accounting Research, 42. https://doi.org/10.1111/j.1475-679X.2004.00157.x.
Brickley, J., Coles, J. & Jarrell, G. (1997). Leadership structure: Separating the CEO and Chairman of the Board. Journal of Corporate Finance, 3, 189-220. https://doi.org/10.1016/S0929-1199(96)00013-2.
Brito, R. & Lima, M. (2005). A escolha da estrutura de capital sob fraca garantia legal: o caso do Brasil. Revista Brasileira de Economia, 59(2), 177-208. https://doi.org/10.1590/S0034-71402005000200002.
Chen, W. P., Chung, H., Hsu, T. L., & Wu, S. (2010). External financing needs, corporate governance, and firm value. Corporate Governance: An International Review, 18, 234-249. https://doi.org/10.1111/j.1467-8683.2010.00801.x.
Chen, Y., Chou, R. & Huang, T. (2015). Corporate governance, product market competition and dynamic capital structure. International Review of Economics and Finance, 38, 44-55. https://doi.org/10.1016/j.iref.2014.12.013.
Crisóstomo, V. & Pinheiro, B. (2016). Estrutura de Capital e Concentração de Propriedade da empresa brasileira. Revista de Finanças Aplicadas.
Delgado-Garcia, J., Quevedo-Puente, E. & Diez-Esteban, J. (2013). The Impact of Corporate Reputation on Firm Risk: A Panel Data Analysis of Spanish Quoted Firms. British Journal of Management. https://doi.org/10.1111/j.1467-8551.2011.00782.x.
Demsetz, H. & Villalonga, B. (2001). Ownership Structure and Corporate Performance; Journal of Corporate Finance; 7,209-233.
Detthamrong, U., Chancharat, N. & Vithessonthi, C. (2016). Corporate governance, capital structure and firm performance: evidence from Thailand. Research in International Business and Finance, 42, 689-709. https://doi.org/10.1016/j.ribaf.2017.07.011.
Fama, E. & Jensen, M. (1983). Agency problems and residual claims. Journal of Law & Economics, XXVI.
Fonseca, C., Silveira, R. & Hiratuka, C. (2016). A Relação entre a Governança Corporativa e a Estrutura de Capital das Empresas Brasileiras no Período 2000-2013. Enfoque: Reflexão Contábil, 35(2), 35-52. https://doi.org/10.4025/enfoque.v35i2.29673.
Fosberg, R. (2004). Agency problems and debt financing: leadership structure effects. Corporate Governance, 4, 31-38. https://doi.org/10.1108/14720700410521943.
Frank, M. & Goyal, V. (2007). Capital Structure Decisions: Which Factors Are Reliably Important? Financial Management, 38(1), 1-37. https://doi.org/10.1111/j.1755-053X.2009.01026.x.
Friend, I. & Lang, L. (1988). An Empirical Test of the Impact of Managerial Self-Interest on Corporate Capital Structure. The Journal of Finance, 43(2), 271-281.
Garvey, G. & Hanka, G. (1999). Capital Structure and Corporate Control: The Effect of Antitakeover Statutes on Firm Leverage. The Journal of Finance, 54(2), 519-545. https://doi.org/10.1111/0022-1082.00116.
Gaud, P., Jani, E., Hoesli, M. & Bender, A. (2003). The Capital Structure of Swiss Companies: An Empirical Analysis Using Dynamic Panel Data. Genebra: The International Center for Financial Asset Management and Engineering.
Harris, M. & Raviv, A. (1991). The Theory of Capital Structure. The Journal of Finance, 46(1), 297-355. https://doi.org/10.1111/j.1540-6261.1991.tb03753.x.
Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76, 323-329.
Jensen, M. & Meckling, W. (1976). Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360. https://doi.org/10.1016/0304-405X(76)90026-X.
Jorge, S. & Armada, M. (2001). Factores Determinantes do Endividamento: Uma Análise em Painel. Revista de Administração Contemporânea, 5(2), 9-31. https://doi.org/10.1590/S1415-65552001000200002.
Kayhan, A. (2008). Managerial Discretion and the Capital Structure Dynamics. Louisiana State University.
Kyereboah-Coleman, A. & Biekpe, N. (2008). The Relationship Between Board Size, Board Composition, CEO Duality and Firm Performance: Experience from Ghana. Corporate Ownership and Control, 4. https://doi.org/10.22495/cocv4i2p11.
La Porta, R.; Lopez-de-Silanes, F.; Shleifer, A. & Vishny, R. (2000). Investor Protection and Corporate Governance. Journal of Financial Economics, 58 (1-2), 3-27.
Larcker, D., Richardson, S. & Tuna, Í. (2004). Does Corporate Governance Really Matter? University of Pennsylvania, Philadelphia. http:// doi.org/10.1.1.180.1479&rep=rep1&type=pdf.
Liao, L., Mukherjee, T. & Wang, W. (2015). Corporate governance and capital structure dynamics: an empirical study. The Journal of Financial Research, 38, 169-191. https://doi.org/10.1111/.
Lizcano Álvarez, J. (2013). El Valor de la Transparencia en las Instituciones Públicas y las Empresas. Barcelona: ACCID – Revista de Contabilidad y Dirección, 16, pp. 109-125.
Miguel, A. & Pindado, J. (2001). Determinants of capital structure: new evidence from Spanish panel data. Journal of Corporate Finance, 7(1), 77-99. https://doi.org/10.1016/S0929-1199(00)00020-1.
Modigliani, F. & Miller, M. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review, 48, 261-297.
Monteiro, T. (2019). Governo das Sociedads em Portugal. Estudo sobre as empresas que compõem o PSI-20. Tese de Mestrado, Católica Porto Business School, Porto.
Myers, S. (1984). The capital structure puzzle. The Journal of Finance, 39, 575-592. https://doi.org/10.2307/2327916.
Myers, S. & Majluf, N. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187-221. https://doi.org/10.1016/0304-405X(84)90023-0.
Ntoung, L., Santos de Oliveira, H., Sousa, B., Pimentel, L. & Bastos, S. (2020). Are Family Firms Financially Healthier Than Non-Family Firm? Journal of Risk and Financial Management, 13. https://doi.org/10.3390/jrfm13010005.
Ntoung, L., Vila Biglieri, J., Santos de Oliveira, H., Ferreira de Sousa, B., Outman, B. & Masárová, E. (2017). The impact of ownership structure on firm performance: The role of chairman and CEO in Portugal. Corporate Board: Role, Duties & Composition, 13. http://doi.org/10.22495/cbv13i2art1.
Oliveira, H. M. S. (2015). A Estrutura Conceptual da Informação Financeira e o Governo das Sociedades: Análise da Relação entre as Caraterísticas das Empresas Cotadas em Portugal e a Informação Divulgada. España: Universidad de Vigo, Faculdad de Ciencias Economicas y Empresariales. Tesis Doctoral
Oulhim, A. (2019). The Impact of Corporate Governance on Capital Structutre. Universidade do Algarve, Faculdade de Economia.
Pinheiro, B., Vasconcelos, A., Luca, M. & Crisóstomo, V. (2017). Estrutura de Capital e Governança Corporativa nas Empresas Listadas na BMFBovespa. Jounal os Education and Research in Accounting, 451-466. https://doi.org/10.17524/repec.v11i4.1706.
Rajan, R. & Zingales, L. (1995). What Do We Know about Capital Structure? Some Evidence from International Data. The Journal of Finance, 50(5), 1421-1460. https://doi.org/10.1111/j.1540-6261.1995.tb05184.x.
Semedo, I. (2015). Teorias da estrutura de capital das empresas :Uma aplicação às empresas Portuguesas cotadas na Euronext Lisboa. Lisboa: Instituto Superior de Gestão.
Serens, M. (2021). Código das Sociedades Comerciais. Coimbra: Edições Almedina, 36th Edição, Reimpressão.
Sheikh, A. & Wang, Z. (2012). Effects of corporate governance on capital structure: empirical evidence from Pakistan. Corporate Governance, 12, 629-641. https://doi.org/10.1108/14720701211275569.
Silva, D. (2009). O Impacto do Corporate Governance na Estrutura de Capitais. Faculdade de Economia da Universidade do Porto, Porto.
Silveira, A., Perobelli, F. & Barros, L. (2008). Governança corporativa e os determinantes da estrutura de capital: evidências empíricas no Brasil. Revista de Administração Contemporânea, 12, 763-788. https://doi.org/10.1590/S1415-65552008000300008.
Smith, A. (1775). Inquérito sobre a Natureza e as Causas da Riqueza das Nações. Fundação Calouste Gulbenkian, Vol. II, Edição de 1981
Tavares, F. (2017). A Estrutura de Capital das Empresas e as Decisões de Financiamento. Universidade Portucalense, Porto.
Titman, S. & Wessels, R. (1988). The Determinants of Capital Structure Choice. The Journal of Finance, 43(1), 1-19. https://doi.org/10.1111/j.1540-6261.1988.tb02585.x.
Toy, N., Stonehill, A., Remmers, L., Wright, R. & Beekhuisen, T. (1974). A Comparative International Study of Growth, Profitability, and Risk as Determinants of Corporate Debt Ratios in the Manufacturing Sector. The Journal of Financial and Quantitative Analysis, 9(5), 875-886. https://doi.org/10.2307/2329684.
Vieira, K., Velasquez, M., Losekann, V. & Ceretta, P. (2011). A influência da governança corporativa no desempenho e na estrutura de capital das empresas listadas na Bovespa. Revista Universo Contábil, 7, 49-67. https://doi.org/10.4270/ruc.2011104.
SNC - Sistema de Normalização Contabilística, Decreto-Lei n.º 98/2015 de Junho.