Corporate Governance Induces Best Performance and Inhibits Leverage: Brazilian Industry Evidence of Oil & Gas

Vládia Geane Moura Silva, Joséte Florencio dos Santos and Moisés Araújo Almeida

Journal of Financial Innovation, 2015, vol. 1, issue 2, 4

Abstract: Purpose. This study analyzes the oil industry, gas and biofuels in order to identify associations between corporate governance practices with capital structure, risk and performance. Methodology. These data were verified through 3SLS models (Three-Stage Least Squares). For this, we used a data set composed of 19 companies, for a panel data analysis in the period 2005-2009. Findings. The results suggest a negative association between leverage and corporate governance company level, supporting the substitution hypothesis, according to which the leverage works as a governance substitute. Also they did not reject the hypothesis that the greater the governance practices, greater market performances and accounting of these companies, as well as reduces the market risk. Limitations. The main limitation of this research is the sample size, 19 companies, with particular focus on an industry, reducing the generalizability of the results. Originality/Value. This study sought to contribute to the understanding of the relationship between corporate governance, capital structure, performance and risk; specifically for the oil, gas and biofuels in Brazil, an important and understudied emerging market.

Keywords: Corporate governance; Performance; Leverage; Risk; Oil and Gas; Emerging Markets (search for similar items in EconPapers)
Date: 2015
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