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Do rated firms outperform non-rated peers in the Gulf Co-operation Council region?

Etumudon Asien ()

Afro-Asian Journal of Finance and Accounting, 2015, vol. 5, issue 1, 37-55

Abstract: This paper examines the financial performance of rated and non-rated listed firms in the Gulf Co-operation Council (GCC) region. It also examines the relationship between financial performance and leverage of rated and non-rated firms. We expect a difference in the financial performance of rated and non-rated firms. The sample consists of 105 rated and an equally-matched sample of non-rated firms in the GCC region. Our parametric t-tests indicate that there are statistically significant differences in leverage and equity multiplier of rated and non-rated firms; but there are no differences in capital intensity, profit margin, earnings per share, and fixed assets intensity of the two groups. Results from multiple cross-sectional panel regression tests indicate that there is a statistically significant relationship between leverage and all the financial performance measures, except for profit margin.

Keywords: credit rating agencies; CRAs; GCC region; Gulf Co-operation Council; leverage; capital intensity; profit margin; earnings per share; fixed assets intensity; equity multiplier; financial performance. (search for similar items in EconPapers)
Date: 2015
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Handle: RePEc:ids:afasfa:v:5:y:2015:i:1:p:37-55