Research Outputs
Do board gender diversity and remuneration impact earnings quality? Evidence from Spanish firms
Purpose: This study aims to investigate how gender diversity and remuneration of boards of directors’ influence earnings quality for Spanish-listed firms. Design/methodology/approach: The sample includes 105 nonfinancial Spanish firms from 2013 to 2018, corresponding to an unbalanced panel of 491 firm-year observations. The primary empirical method uses a Tobit semiparametric estimator with firm- and industry-level fixed effects and an innovative set of measures for earnings quality developed by StarMine. Findings: Results exhibit a positive correlation between increased gender diversity and a firm’s earnings quality, suggesting that a gender-balanced board of directors is associated with more transparent financial reporting and informative earnings. We also find a nonmonotonic, concave relationship between board remuneration and earnings quality. This indicates that beyond a certain point, excessive board compensation leads to more opportunistic manipulation of financial reporting with subsequent degradation of earnings quality. Research limitations/implications: This study only covers nonfinancial Spanish listed firms and is silent about how alternative board features’ influence earnings quality and their informativeness. Originality/value: This study introduces measures of earnings quality developed by StarMine that have not been used in the empirical literature before as well as measures of board gender diversity applied to a suitable Tobit semiparametric estimator for fixed effects that improves the precision of results. In addition, while most of the literature focuses on Anglo-Saxon countries, this study discusses board gender diversity and board remuneration in the underexplored context of Spain. Moreover, the hand-collected data set comprising financial reports provides previously untested board features as well as a nonlinear relationship between remuneration and earnings quality that has not been thoroughly discussed before.
Ibero-American corporate ownership and boards of directors: Implementation and impact on firm value in Chile and Spain
From a corporate governance point of view, this paper addresses the question of how corporate ownership and board characteristics influence firm value for a sample of Ibero-American companies. Specifically, we analyse indexed non-financial companies from Chile and Spain for the period 2007 – 2016, using the GMM panel data technique. Our research is novel in considering a two-country approach, with one emerging and one developed country, and in analysing how corporate ownership and board characteristics, in addition to contextual variables, determine firm value. Our results assess the efficiency of corporate governance mechanisms. Although findings are intriguing regarding ownership concentration, they confirm the benefits of a good board of directors. This type of board is characterised by a large size, sufficiently independent directors, and a balance in terms of gender diversity. We provide several policy recommendations from our main findings.
Group affiliation and ownership concentration as determinants of capital structure decisions: Contextualizing the facts for an emerging economy
This study considers the firm’s affiliation with business groups and the ownership structure as determinants of leverage decisions in Chilean firms. The major findings show that group-affiliated firms take advantage of internal capital markets and transactions with related parties (e.g., low transference price or loans at competitive interest rates) that reduces the demand for external debt. Majority shareholders in affiliated firms behave as controllers of managers, on the one hand, and avoid the supervisory role of debt, on the other hand. In stand-alone firms, supervision led by majority shareholders is complemented by the monitoring role of debt through higher levels of leverage. We conclude that further developments in capital structure theories adjusted to the particularities of the different institutional contexts are needed
Capital structure in the Chilean corporate sector: Revisiting the stylized facts
The purpose ofthis paper is to analyze the traditional drivers ofthe capital structure, in addition to others particularities ofthe Chilean corporate sector. Using panel data methodology, this study examines the potential drivers of the capital structure in a sample of 157 Chilean firms. To do that, this study also includes variables not commonly used in the literature (e.g. ownership concentration, business groups affiliation, and dividends), as distinctive elements of the Chilean corporate sector. Our results show a positive effect of firm size and ownership concentration on firms leverage; as well as a negative effect of the pay-out policy, growth opportunities, non-debt tax shields, and profitability on the leverage. Some expected relationships in theAnglo-Saxon context are also curiously observed in Chile. Nevertheless, there are some relations that are not in line with the current literature such as the negative relationship between asset tangibility and leverage. Finally, firms’ affiliation to economic groups allows them to take advantage of internal capital markets, increasing leverage. This suggests that some of the insights from the current theoretical bodies are not portable across countries, and consequently, much remains to be done in order to understand the impact of different institutional features on capital structure choices. Emerging markets provide a challenge to existing models that need to be reformulated to accommodate the characteristics of these markets. This study contributes in this direction by taking into consideration the particularities of an emerging Latin American Economy.
How regulation affects the relevance of bank-debt maturity as a control mechanism in developed countries
Improvements in transparency at the country level have modified the relevance of bank debt maturity as a control mechanism. The novelty of this research is that we provide empirical evidence that the maturity of bank borrowing is contingent on the characteristics of the regulatory and the institutional setting about corporate governance. The main implication of our paper is that corporate governance rules have greater influence in civil-law countries than in common-law countries in promoting efficiency in the use of bank debt maturity. The value of this paper is that our results confirm that the implementation of similar regulations on transparency across countries with different legal systems favors the alignment of the role played by short-term bank debt in addressing asymmetric information, agency costs, and inefficient liquidation.
Debt, or not debt, that is the question: A Shakespearean question to a corporate decision
Capital structure theories are unable to properly explain the zero-debt puzzle, frequently observed in firms around the world. Our paper’s contribution is to identify the variables that measure either firm’s characteristics or environmental effects, in order to explain why firms have and eventually keep a debt-free policy. Our study includes a comprehensive sample of firms from 47 countries in the period 1996–2014. Our results indicate that all equity companies are small, with no growth opportunities, with a low level of tangible assets, high proportion of liquid assets, profitable, and with diluted insider ownership. Furthermore, it is more probable to find low levels of debt in countries with good governance indicators or when the economy is not growing.