The effects of sovereign rating and corporate governance on the capital structure of Latin American companies
| Autor | Duterval Jesuka, Fernanda Maciel Peixoto |
| Cargo | Universidade Federal de Uberlândia, Uberlândia, MG, Brazil/Universidade Federal de Uberlândia, Uberlândia, MG, Brazil |
1
BAR-Brazilian Administration Review, 20(1), e220027, 2023.
Research Article
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Keywords:
corporate governance; capital structure;
sovereign rating; Latin America.
JEL Code:
M4; M21; G3; G24.
Received:
February 16, 2022.
This paper was with the authors for two revisions.
Accepted:
January 20, 2023.
Publication date:
February 23, 2023.
Funding:
The aut hors tha nk Coordenação de Aperfeiçoamento de
Pessoal de Nível Superior and Fundação de Amparo à Pesquisa
do Estado de Minas Gerais, for the financial support for the
research in this article.
Conflict of Interests:
The authors have stated that there is no conflict of interest.
Corresponding author:
Fernanda Maciel Peixoto
Universidade Federal de Uberlândia,
Av. João Naves de Ávila, n. 2191, Santa Mônica,
CEP 38408-022, Uberlândia, MG, Brazil
fmacielpeixoto@gmail.com
Editor-in-Chief:
Ivan Lapuente Garrido
(Universidade do Vale do Rio dos Sinos, Brazil).
Associate Editor:
Angela Póvoa
(Pontifícia Universidade Católica do Paraná, Brazil).
Reviewers:
Robert Iquiapaza
(Universidade Federal de Minas Gerais, Brazil)
Newton C. A. da Costa Jr
(Universidade Federal de Santa Catarina, Brazil)
Editorial assistants:
Kler Godoy and Simone Rafael
(ANPAD, Maringá, Brazil).
ABSTRACT
This study analyzed the eects of sovereign rating and corporate governance (CG)
on the capital structure of Latin American companies. A multilevel regression model
was used for 823 companies listed on major Latin American stock exchanges over the
period 2004-2018. The results showed that firm level is the most responsible factor
for the variation in companies’ capital structure, while country level had the greatest
influence on the variation in long-term debt. In the absence of CG mechanisms, sover-
eign rating is one of the factors not controlled by managers that can explain the capital
structure of Latin American companies, which reduce their debt levels to protect them-
selves in the face of their countries’ sovereign rating variations. The results indicated
that, despite having an audit committee and keeping independent members on the
committee, firms choose to reduce their debt levels to protect themselves against the
constant variations of their countries’ sovereign rating. The results also showed that CG
mechanisms do not act in isolation when it comes to reducing agency problems. This
research is one of the first studies to provide evidence on the implications of sovereign
ratings and CG on the capital structure of firms in Latin America.
The Eects of Sovereign Rating and Corporate
Governance on The Capital Structure of Latin
American Companies
Duterval Jesuka1 , Fernanda Maciel Peixoto1
1 Universidade Federal de Uberlândia, Uberlândia, MG, Brazil
How to cite: Jesuka, D., & Peixoto, F. M. (2023). The eects of sovereign rating and corporate governance on the capital structure of Latin American companies.
BAR-Brazilian Administration Review, 20(1), e220027.
DOI: https://doi.org/10.1590/1807-7692bar2023220027
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