The impact of the supervisory board on bond ratings of non-financial companies
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Received October 1, 2019;Accepted December 10, 2019;Published February 6, 2020
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DOIhttp://dx.doi.org/10.21511/imfi.17(1).2020.02
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Article InfoVolume 17 2020, Issue #1, pp. 15-23
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Cited by1 articlesJournal title: Future Business JournalArticle title: Influence of board mechanisms on sustainability performance for listed firms in Sub-Saharan AfricaDOI: 10.1186/s43093-023-00258-5Volume: 9 / Issue: 1 / First page: / Year: 2023Contributors: Peter Kwarteng, Kingsley Opoku Appiah, Bismark Addai
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Issuing bonds is one of the alternative ways for non-financial companies to get money from the public besides borrowing money from banks. Compared with getting money banks, obtaining money from the bond market is slightly economical because the companies are not essential to borne the intermediation cost anymore. As a consequence, the companies in the bond market will get the assessment from the appointed agency. Furthermore, the rating of bonds will determine their reputation.
Mentioning the literature review, the bond ratings are affected by the features of the supervisory board: size, independence, and audit committee. Therefore, this research intends to attain two goals. Firstly, it aims to prove and analyze the impact of the supervisory board size and independence, as well as the audit committee size on the company’s possibility to get a high bond rating with profitability as the control variable. Secondly, it intends to know the accuracy rate of grouping the company bond ratings through the classification matrix.
The population originates from the non-financial companies. The total samples are determined by the Slovin formula with a boundary of the fault of 10%. Based on this formula, the total samples are 36 companies. Furthermore, they are randomly grabbed from the population. The ordered probit regression model and the classification matrix are utilized to analyze the data.
Based on the data analysis, this research finds out that the supervisory board size and independence, the audit committee size, and profitability positively affect the bond ratings. It means that the number of the commissioner board and the members of the audit committee have to be added until achieving the maximum level to monitor the performance of the directors so that the company can reach a high bond rating. To sum up, board governance is effective in improving the company’s bond rating.
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JEL Classification (Paper profile tab)G24, G32, G34
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References37
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Tables6
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Figures1
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- Figure 1. The normality test result on residuals
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- Table 1. Description to measure research variables
- Table 2. Number of the companies based on the group of bond ratings
- Table 3. Descriptive statistics of SBS, SBI, ACS, and ROA
- Table 4. Estimation result of the ordered probit regression model: the impact of supervisory board size and independence, audit committee size, and profitability on bond rating
- Table 5. The accuracy of grouping bond rating based on SBS, SBI, ACS, and ROA
- Table A1. Names of the companies as the samples
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The moderating role of firm size and interest rate in capital structure of the firms: selected sample from sugar sector of Pakistan
Sarfraz Hussain , Abdul Quddus , Pham Phat Tien , Muhammad Rafiq , Drahomíra Pavelková doi: http://dx.doi.org/10.21511/imfi.17(4).2020.29Investment Management and Financial Innovations Volume 17, 2020 Issue #4 pp. 341-355 Views: 3449 Downloads: 371 TO CITE АНОТАЦІЯThe selection of financing is a top priority for businesses, particularly in short- and long-term investment decisions. Mixing debt and equity leads to decisions on the financial structure for businesses. This research analyzes the moderate position of company size and the interest rate in the capital structure over six years (2013–2018) for 29 listed Pakistani enterprises operating in the sugar market. This research employed static panel analysis and dynamic panel analysis on linear and nonlinear regression methods. The capital structure included debt to capital ratio, non-current liabilities, plus current liabilities to capital as a dependent variable. Independent variables were profitability, firm size, tangibility, Non-Debt Tax Shield, liquidity, and macroeconomic variables were exchange rates and interest rates. The investigation reported that profitability, firm size, and Non-Debt Tax Shield were significant and negative, while tangibility and interest rates significantly and positively affected debt to capital ratio. This means the sugar sector has greater financial leverage to manage the funding obligations for the better performance of firms. Therefore, the outcomes revealed that the moderators have an important influence on capital structure.
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Service quality, customers’ satisfaction, and profitability: an empirical study of Saudi Arabian insurance sector
Investment Management and Financial Innovations Volume 15, 2018 Issue #2 pp. 232-247 Views: 3445 Downloads: 574 TO CITE АНОТАЦІЯFinancial performance is the fundamental aspect to test the performance of the companies. The performance of insurance sector, like any other service industry, is supposed to depend significantly on customers. When it comes to customers, it is an established fact that customer satisfaction would be an important element. Customer satisfaction primarily depends on the quality of service it gets. It can be safely hypothesized that better service quality would lead to higher satisfaction, which would ultimately lead to higher profits for the company. Studies on this relationship in the insurance sector for Saudi Arabia are missing. Hence, this study aims at studying both the profitability of companies and quality of service and tries to relate it to customer satisfaction. The results are quite surprising, as the study establishes that although the qualities of services are found wanting in many areas, companies are earning good profits. A probable reason could be the statutory nature of the services. Nevertheless, this study recommends improving the quality of services and differentiating services between age groups for further improvement.
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