IDEAS home Printed from https://ideas.repec.org/a/abg/anprac/v23y2019i61366.html
   My bibliography  Save this article

Capital Structure and Governance Mechanisms External to the Firm: A Cross-Country Analysis

Author

Listed:
  • Flávia Mendonça
  • Henrique Martins
  • Paulo Terra

Abstract

This study investigates whether governance mechanisms external to the firm affect leverage using a sample of 7.490 companies from 40 countries. Our contribution is to separate mechanisms that protect minority shareholders from those that protect creditors rights. Our results show that companies issue debt following the Pecking Order Theory (POT). We find that both mechanisms protecting shareholders and creditors affect corporate leverage. When protection is high, companies issue less debt. Our results are robust to several alternative specifications and variations in our model. We interpret our results as evidence that, when investors are well protected, firms issue less debt, possibly to avoid the monitoring role of debt over the discretion of insiders.

Suggested Citation

  • Flávia Mendonça & Henrique Martins & Paulo Terra, 2019. "Capital Structure and Governance Mechanisms External to the Firm: A Cross-Country Analysis," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 23(6), pages 765-785.
    • Handle: RePEc:abg:anprac:v:23:y:2019:i:6:1366
    as

    Download full text from publisher

    File URL: https://rac.anpad.org.br/index.php/rac/article/view/1366/1420
    Download Restriction: no
    File URL: https://rac.anpad.org.br/index.php/rac/article/download/1366/1420
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:abg:anprac:v:23:y:2019:i:6:1366. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Information Technology of ANPAD (email available below). General contact details of provider: http://anpad.org.br .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.