Corporate Governance and Capital Structure in Brazil: Stock, Bonds and Substitution
Keywords:
Stock Market Development, Bond Market Development, Capital Structure, Corporate Governance, Bond and Stock Complementarity HypothesisAbstract
Purpose: To study the Brazilian bond and stock markets for testing the stock market development theory of Demirgüc-Kunt & Maksimovic (1996).
Originality/Gap/Relevance/Implications: This paper tests the substitution hypothesis of stock market development, from debt to stocks, in a context of improved corporate governance, by analysing the data with cointegration techniques. The findings show that the substitution hypothesis is rejected, as the bond market has a positive and significant association with stock market improvements. The findings also show that improving the quality of corporate governance could lead own and borrower capital sources to be complementary and not substitutes, suggesting that Brazilian stock market reform has created a virtuous development cycle.
Key methodological aspects: Positivist research using quantitative methodology. Data from a sample of 171 firms during 20 years´ analysed with cointegration. The null was a negative association between bond and stock markets.
Summary of key results: Null rejection, non-consistent to theoretical framework. The results have shown a positive and significant association between stock and debt in an improved corporate governance context.
Key considerations/conclusions: Improving the quality of corporate governance could lead own and borrower capital sources to be complementary and not substitutes, suggesting that Brazilian stock market reform has created a virtuous development cycle.
Downloads
Downloads
Additional Files
Published
Issue
Section
License
Once the papers have been approved, the authors will assign their copyrights to this Journal. The Copyright Assignment Conditions include:
1. The Mackenzie Administration Journal holds the rights to all the papers published therein through assignment of copyright.
2. The author retains moral rights to the paper, including the right to identify the author whenever the article is published.
3. As of July 1, 2015 RAM adopted the CC-BY license standard (Creative Commons– BY). Authors are allowed to copy, distribute, display, transmit and adapt articles. Authors must attribute to RAM explicitly and clearly an article’s original publication (with reference to the journal’s name, edition, year and pages in which the article was originally published), yet without suggesting that RAM endorses the author or its use of the article. Contents are released by means of the CC-BY license to fully inter-operate with a variety of different systems and services, including for commercial purposes. In case of an article’s reuse or distribution, authors must make the article’s licensing terms clear to third parties. CC-BY criteria follow open access policies by major OA (Open Access) publishers and journals, such as PLoS, eLife, Biomed Central and Hindawi, among others.
4. When formally requested by the author, this Journal may allow the paper to be published as a chapter or part of a book. The only requirement is that prior publication in this Journal (Journal name, issue, year and pages) must be clearly and explicitly shown as a reference.