Corporate Governance, Bankruptcy Law and Firms' Debt Financing under Uncertainty

Bruno Funchal (), Fernando Caio Galdi () and Paulo Coimbra
Additional contact information
Fernando Caio Galdi: FUCAPE Business School

No 2, Fucape Working Papers from Fucape Business School

Abstract: This paper examines the relationship between corporate governance level and the bankruptcy law to such debt variables as firms? cost of debt and amount of debt under uncertainty (in the Knight´s sense). First we find that the better the corporate governance and the harsher bankruptcy law, the lower the cost of debt. Second, we find that better governance and a harsher bankruptcy laws have a positive effect on debt. As consequence, firms increase their set of investment projects financed by creditors. Finally, uncertainty has a negative effect on terms of debt (higher interest rate and smaller set of financed investment projects) and such effect is stronger for firms with worse corporate governance and for economies with a bankruptcy law that is lenient to debtors.

Keywords: Debt; Cost of Debt; Corporate Governance; Bankruptcy; Uncertainty. (search for similar items in EconPapers)
Pages: 09
Date: 2008-11
References: View complete reference list from CitEc
Citations:

Published in Fucape Working Papers Novembro 2008

Downloads: (external link)
http://www.fucape.br/_public/workingpapers/02-2008.pdf Primeira Versão, 2008
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.fucape.br/_public/workingpapers/02-2008.pdf [301 Moved Permanently]--> https://www.fucape.br/_public/workingpapers/02-2008.pdf [301 Moved Permanently]--> https://fucape.br/_public/workingpapers/02-2008.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bbz:fcpwps:02

Access Statistics for this paper

More papers in Fucape Working Papers from Fucape Business School Fucape Business School Brazilian Business Review Av. Fernando Ferrari, 1358, Boa Vista CEP 29075-505 Vitória-ES. Contact information at EDIRC.
Bibliographic data for series maintained by Adriana Gasparino ( this e-mail address is bad, please contact ).