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Corporate Governance And Financial Structures Of Companies In Developing Countries

Author

Listed:
  • Bogdan Dima

    (West University of Timisoara Romania)

  • Alin Ionescu

    (West University of Timisoara Romania)

  • Petru Tudoreanu

    (West University of Timisoara Romania)

Abstract

The main purpose of this paper is to test the impact of corporate governance quality onthe financial structure of companies using a dataset covering 35 developing countries from Centraland Eastern Europe as well as from Asia. Five variables related to corporate financial structureand eleven governance quality variables provided by World Bank Database are grouped in twosynthetic descriptors by involving a Principal Components Analysis approach. In order to test theexistence of a possible linkage between these descriptors we used Generalized Linear Modelsframework. To check robustness of results, accordingly to the standard capital structure theories,we considered some control variables.The main output consists in the thesis that the financial structure of the companies is significantlyinfluenced by the quality of corporate governance. Also, we find that the exclusion from theexplanatory variables of the proportion of investments financed by other financing variableimproves the robustness of the results.

Suggested Citation

  • Bogdan Dima & Alin Ionescu & Petru Tudoreanu, 2013. "Corporate Governance And Financial Structures Of Companies In Developing Countries," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(15), pages 1-14.
  • Handle: RePEc:alu:journl:v:1:y:2013:i:15:p:14
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    File URL: http://oeconomica.uab.ro/upload/lucrari/1520131/14.pdf
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    References listed on IDEAS

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    1. Li, Baibing & Martin, Elaine B. & Morris, A. Julian, 2002. "On principal component analysis in L1," Computational Statistics & Data Analysis, Elsevier, vol. 40(3), pages 471-474, September.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Lutkepohl, Helmut, 2007. "General-to-specific or specific-to-general modelling? An opinion on current econometric terminology," Journal of Econometrics, Elsevier, vol. 136(1), pages 319-324, January.
    4. Charles J. Hadlock, 1998. "Ownership, Liquidity, and Investment," RAND Journal of Economics, The RAND Corporation, vol. 29(3), pages 487-508, Autumn.
    5. Dima, Bogdan & Cuzman, Ioan & Dima (Cristea), Stefana Maria & Şărămăt, Otilia, 2010. "Effects of financial and non-financial information disclosure on prices’ mechanisms for emergent markets: The case of Romanian Bucharest Stock Exchange," MPRA Paper 27169, University Library of Munich, Germany.
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    Citations

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    Cited by:

    1. repec:cys:ecocyb:v:50:y:2017:i:4:p:159-172 is not listed on IDEAS
    2. Ionescu Alin, 2015. "The Impact Of Corporate Governance Quality On Companies Performance In Developing Countries," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 250-254, August.
    3. Ionescu Alin & Tudoreanu Petru, 2014. "The Impact Of Corporate Governance Dimensions On Financial Structure Of The Companies In Developing Countries," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 6, pages 23-29, December.

    More about this item

    Keywords

    Corporate Governance; Financial Structure; Indexation Model; Developing Countries;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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