How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms
Autor(a) principal: | |
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Data de Publicação: | 2022 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.19/7407 |
Resumo: | Abstract: This paper investigates how bank characteristics (market share, principal shareholders, profitability, and size), and the gender of the company’s board members, along with their supervisory abilities, influence the firm’s performance, cost of debt, and leverage. We extracted relevant data from a sample of nearly 18,300 Portuguese companies in 2020 (the pandemic year) to build our model with all the main explanatory variables; then, through the least absolute shrinkage and selection operator estimation, we reduced the variables. The robust ordinary least-squares standard-errors approach was applied by company size. Our findings allowed us to observe the crucial negative role of multiple bank relations, but only on the returns of small companies. A decrease in bank relations led to an increase in debt cost and reduced leverage across larger companies. Profitable banks generate higher company returns, mainly for small companies. Furthermore, the better-informed bank shareholders (management, institutional, or government) persuaded the banks to charge higher interest rates, resulting in a higher leverage ratio for companies of average size. Female board members tended to vote for lower debt ratios due to greater risk aversion, while the opposite was true of male board members. The supervisory capacity of the board in the area of bank relations showed a more substantial link with the increased financing costs of small companies. In brief, bank characteristics and board gender were strongly associated with the financial aggregates of companies relative to their size. This work contributes to the literature by using new bank characteristics and an original variable representing board ability to cope with bank relations. To the best of our knowledge, this is the first study to determine the association of the above characteristics in the Portuguese market relative to company size, and their impact on profitability, cost of debt, and leverage. The company board and banking systems should evaluate the impact of their decisions on corporate activity and make necessary adjustments. |
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How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firmsbank relationshipgender board membersfinancing constraintsROAleveragedebt cosAbstract: This paper investigates how bank characteristics (market share, principal shareholders, profitability, and size), and the gender of the company’s board members, along with their supervisory abilities, influence the firm’s performance, cost of debt, and leverage. We extracted relevant data from a sample of nearly 18,300 Portuguese companies in 2020 (the pandemic year) to build our model with all the main explanatory variables; then, through the least absolute shrinkage and selection operator estimation, we reduced the variables. The robust ordinary least-squares standard-errors approach was applied by company size. Our findings allowed us to observe the crucial negative role of multiple bank relations, but only on the returns of small companies. A decrease in bank relations led to an increase in debt cost and reduced leverage across larger companies. Profitable banks generate higher company returns, mainly for small companies. Furthermore, the better-informed bank shareholders (management, institutional, or government) persuaded the banks to charge higher interest rates, resulting in a higher leverage ratio for companies of average size. Female board members tended to vote for lower debt ratios due to greater risk aversion, while the opposite was true of male board members. The supervisory capacity of the board in the area of bank relations showed a more substantial link with the increased financing costs of small companies. In brief, bank characteristics and board gender were strongly associated with the financial aggregates of companies relative to their size. This work contributes to the literature by using new bank characteristics and an original variable representing board ability to cope with bank relations. To the best of our knowledge, this is the first study to determine the association of the above characteristics in the Portuguese market relative to company size, and their impact on profitability, cost of debt, and leverage. The company board and banking systems should evaluate the impact of their decisions on corporate activity and make necessary adjustments.Repositório Científico do Instituto Politécnico de ViseuReis, PedroPinto, António2022-11-18T11:12:33Z2022-10-192022-11-16T16:12:11Z2022-10-19T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.19/7407engReis, P. M. N., & Soares Pinto, A. P. (2022). How Do Banking Characteristics Influence Companies’ Debt Features and Performance during COVID-19? A Study of Portuguese Firms. International Journal of Financial Studies, 10(4), 98. https://doi.org/10.3390/ijfs100400982227-7072cv-prod-307598010.3390/ijfs10040098metadata only accessinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-01-16T15:29:34Zoai:repositorio.ipv.pt:10400.19/7407Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T16:45:08.560954Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
title |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
spellingShingle |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms Reis, Pedro bank relationship gender board members financing constraints ROA leverage debt cos |
title_short |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
title_full |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
title_fullStr |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
title_full_unstemmed |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
title_sort |
How Do Banking Characteristics Influence Companies Debt Features and Performance during COVID-19? A Study of Portuguese Firms |
author |
Reis, Pedro |
author_facet |
Reis, Pedro Pinto, António |
author_role |
author |
author2 |
Pinto, António |
author2_role |
author |
dc.contributor.none.fl_str_mv |
Repositório Científico do Instituto Politécnico de Viseu |
dc.contributor.author.fl_str_mv |
Reis, Pedro Pinto, António |
dc.subject.por.fl_str_mv |
bank relationship gender board members financing constraints ROA leverage debt cos |
topic |
bank relationship gender board members financing constraints ROA leverage debt cos |
description |
Abstract: This paper investigates how bank characteristics (market share, principal shareholders, profitability, and size), and the gender of the company’s board members, along with their supervisory abilities, influence the firm’s performance, cost of debt, and leverage. We extracted relevant data from a sample of nearly 18,300 Portuguese companies in 2020 (the pandemic year) to build our model with all the main explanatory variables; then, through the least absolute shrinkage and selection operator estimation, we reduced the variables. The robust ordinary least-squares standard-errors approach was applied by company size. Our findings allowed us to observe the crucial negative role of multiple bank relations, but only on the returns of small companies. A decrease in bank relations led to an increase in debt cost and reduced leverage across larger companies. Profitable banks generate higher company returns, mainly for small companies. Furthermore, the better-informed bank shareholders (management, institutional, or government) persuaded the banks to charge higher interest rates, resulting in a higher leverage ratio for companies of average size. Female board members tended to vote for lower debt ratios due to greater risk aversion, while the opposite was true of male board members. The supervisory capacity of the board in the area of bank relations showed a more substantial link with the increased financing costs of small companies. In brief, bank characteristics and board gender were strongly associated with the financial aggregates of companies relative to their size. This work contributes to the literature by using new bank characteristics and an original variable representing board ability to cope with bank relations. To the best of our knowledge, this is the first study to determine the association of the above characteristics in the Portuguese market relative to company size, and their impact on profitability, cost of debt, and leverage. The company board and banking systems should evaluate the impact of their decisions on corporate activity and make necessary adjustments. |
publishDate |
2022 |
dc.date.none.fl_str_mv |
2022-11-18T11:12:33Z 2022-10-19 2022-11-16T16:12:11Z 2022-10-19T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.19/7407 |
url |
http://hdl.handle.net/10400.19/7407 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Reis, P. M. N., & Soares Pinto, A. P. (2022). How Do Banking Characteristics Influence Companies’ Debt Features and Performance during COVID-19? A Study of Portuguese Firms. International Journal of Financial Studies, 10(4), 98. https://doi.org/10.3390/ijfs10040098 2227-7072 cv-prod-3075980 10.3390/ijfs10040098 |
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metadata only access info:eu-repo/semantics/openAccess |
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metadata only access |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
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Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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RCAAP |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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