Interaction effects of country-level governance quality and debt on stock returns in developing nations
This study examines the moderating effects of country-level governance quality on the relationship between debt and stock returns, using 3,891 firms from 23 developing countries covering the period from 2006 to 2014. Applying the panel generalized method of moments to con...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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2018
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| Online Access: | http://psasir.upm.edu.my/id/eprint/74713/ http://psasir.upm.edu.my/id/eprint/74713/1/Interaction%20effects.pdf |
| _version_ | 1848857542819577856 |
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| author | Matemilola, Bolaji Tunde A. N, Bany Ariffin Md.Nassir, Annuar |
| author_facet | Matemilola, Bolaji Tunde A. N, Bany Ariffin Md.Nassir, Annuar |
| author_sort | Matemilola, Bolaji Tunde |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This study examines the moderating effects of country-level governance quality on the relationship between debt and stock returns, using 3,891 firms from 23 developing countries covering the period from 2006 to 2014. Applying the panel generalized method of moments to control for endogeneity, the findings reveal that country-level governance quality has positive moderating effects on the relationship between book debt and stock returns. Robustness check using market debt show that country-level governance quality has positive moderating effects on the relationship between market debt and stock returns. Additional analysis controls for the financial crisis years and the results are broadly similar, except that the coefficients of some variables change. The results suggest that strong governance quality lowers financial risk which encourage firms to raise debt capital needed to maximize stockholders’ returns. |
| first_indexed | 2025-11-15T11:59:13Z |
| format | Article |
| id | upm-74713 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T11:59:13Z |
| publishDate | 2018 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-747132020-03-17T08:13:11Z http://psasir.upm.edu.my/id/eprint/74713/ Interaction effects of country-level governance quality and debt on stock returns in developing nations Matemilola, Bolaji Tunde A. N, Bany Ariffin Md.Nassir, Annuar This study examines the moderating effects of country-level governance quality on the relationship between debt and stock returns, using 3,891 firms from 23 developing countries covering the period from 2006 to 2014. Applying the panel generalized method of moments to control for endogeneity, the findings reveal that country-level governance quality has positive moderating effects on the relationship between book debt and stock returns. Robustness check using market debt show that country-level governance quality has positive moderating effects on the relationship between market debt and stock returns. Additional analysis controls for the financial crisis years and the results are broadly similar, except that the coefficients of some variables change. The results suggest that strong governance quality lowers financial risk which encourage firms to raise debt capital needed to maximize stockholders’ returns. 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/74713/1/Interaction%20effects.pdf Matemilola, Bolaji Tunde and A. N, Bany Ariffin and Md.Nassir, Annuar (2018) Interaction effects of country-level governance quality and debt on stock returns in developing nations. Capital Markets Review, 26 (1). 19 - 35. |
| spellingShingle | Matemilola, Bolaji Tunde A. N, Bany Ariffin Md.Nassir, Annuar Interaction effects of country-level governance quality and debt on stock returns in developing nations |
| title | Interaction effects of country-level governance quality and debt on stock returns in developing nations |
| title_full | Interaction effects of country-level governance quality and debt on stock returns in developing nations |
| title_fullStr | Interaction effects of country-level governance quality and debt on stock returns in developing nations |
| title_full_unstemmed | Interaction effects of country-level governance quality and debt on stock returns in developing nations |
| title_short | Interaction effects of country-level governance quality and debt on stock returns in developing nations |
| title_sort | interaction effects of country-level governance quality and debt on stock returns in developing nations |
| url | http://psasir.upm.edu.my/id/eprint/74713/ http://psasir.upm.edu.my/id/eprint/74713/1/Interaction%20effects.pdf |