Corporate governance and capital structure in Latin America: empirical evidence

Abstract

Purpose – This study aims to examine the relationship between corporate governance mechanisms and the capital structure of Latin American firms. Design/methodology/approach – The sample included companies from Argentina, Brazil, Chile, Colombia, Mexico and Peru. The authors collected data from 201 non-financial companies between 2009 and 2018, totalizing 1,716 firm-year observations. The data were analyzed using descriptive statistics and linear regression models with panel data. Findings – The main results indicated that chief executive officer duality, legal protection system and corporate social responsibility voluntary disclosure impact the firm's total debt ratio, corresponding to a positive effect for the first two variables and a negative for the last. Originality/value – This study advances in two main ways. Firstly, due to the broad approach in which the authors addressed corporate governance, involving board composition, ownership structure, minority shareholders legal protection system and information disclosure. Secondly, by presenting empirical evidence about the effects of corporate governance on capital structure from an extensive sample of Latin American firms, the authors expect to contribute to the international debate on the capital structure due to the unique characteristics of Latin America in this regard.

Keywords

• Capital structure
• Corporate governance
• Capital markets
• Latin America