The impact of adhesion to better corporate governance standards on the entrepreneurial financing

Abstract

In Brazil, the attainment of credit for the companies is made it difficult by the uncertainties concerning the court decisions and by weak enforcement of the laws, what shows its institutional fragility. The present work searches to verify if the improvement in the corporate governance of the companies, for improving the quality of the information given to the market and improving the pledge of the borrowers with the investors, contributes to smooth the institutional imperfections of the country, increasing the financing of the companies. To achieve this, the work compares the indexes of leverage of the companies who had adhered to the norms contained in the governance differentiated standards of the São Paulo Stock Exchange (Bovespa) with the companies who had continued negotiating its shares in the traditional market. The results of the tests with panel data had shown that, controlling for the size of the companies (total asset), the dummy variable of governance was positively correlated and statistical significant for the indexes of Gross Debt /Net Equity (NE) and Long-Term Liabilities/NE, negatively correlated and statistical significant with the index of Current Liabilities/NE and did not present statistical significance for the Debt (total)/ NE. By this way, the two first indexes show that the companies with better levels of governance had increased its financing with the financial entities and its total long-term indebtedness, but had had a reduction in its total indebtedness of short term, what can explain the insignificance of the dummy variable of governance for the total debt, as shown by the last index.