ESTG - Mestrado em Negócios Internacionais
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Browsing ESTG - Mestrado em Negócios Internacionais by advisor "Costa, Magali Pedro"
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- Financial Reporting Quality Impact on the Firm’s Capital StructurePublication . Reis, Carolina Pereira; Lisboa, Inês Margarida Cadima; Costa, Magali PedroPast literature on capital structure has demonstrated that firms’ financing decisions play a crucial role in their performance and longevity. Accordingly, researchers have often addressed this subject to understand why firms opt for either debt or equity financing. Most research suggests that capital structure is predominantly determined by two elements: the firms’ internal and external characteristics. In this study, we investigate the possible impact of the quality of financial information that has been frequently neglected. Since financial reports are the principal basis for most financial decisions, their quality and information heavily influence capital structure choices. However, some managers have been known to resort to earnings management practices during times of financial hardship, to conceal difficulties and maintain a facade of growth and stability for stakeholders. Such practices compromise the quality of financial information, possibly hindering financial decisions. Therefore, this study aims to investigate the potential impact of financial reporting quality on firms’ capital structure. Our hypothesis is tested using an unbalanced panel sample of 414 firms from four European stock exchanges between 2013 and 2022. To evaluate capital structure, we employ total and maturity debt ratios, based on book and market values, to achieve a more comprehensive result. Financial reporting quality is also evaluated through multiple proxies, such as accruals quality, smoothness, timeliness, and accounting conservatism. Our empirical regressions were estimated through the fixed effects and the OLS models. The global analysis revealed mixed findings, with three variables of financial reporting quality exhibiting a positive impact on debt (accruals quality, smoothness, and accounting conservatism), while the remaining proxy presented a negative impact (timeliness). Further analysis also indicates that companies affected by Troika policies experienced a contrasting effect of timeliness on debt, while the other firms displayed results consistent with the global analysis. Moreover, both firm-specific and macroeconomic factors exhibited substantial statistical significance in influencing debt in all the estimated models. These conclusions broaden our knowledge on factors that define capital structure, as well as the relevance of financial reporting.
- The relationship between CEO’ remuneration and firm performance: Evidence from ATX and DAXPublication . Marzinzik, René; Costa, Magali Pedro; Lisboa, Inês Margarida CadimaChief Executive Officers’ (CEO) remuneration became a more discussed topic in the media in recent years as CEOs have, on average, higher remuneration in comparison to the average salary of the company’s employees. On the one hand side, the risk and the responsibility which they bear needs to be valued. With their broad knowledge and experience, they contribute to the overall firm performance and may improve it. On the other hand, with positive performance results and possible raises of the share price, the CEOs can benefit from variable remuneration components in the form of bonuses or share packages of the firm. Our work aims to shed light on the impact of the CEO remuneration on firm performance and vice versa, i.e., the impact of the firm performance on the CEO remuneration and the simultaneous influence. The analysis is done with secondary data of Austrian and German firms listed in the leading share indices ATX (Austrian Traded Index) and DAX (Deutscher Aktienindex), respectively, during the period from 2012 to 2019. CEO remuneration specified into their main components: a fixed and a variable (performance-related) part, is analyzed. Both accounting-based (ROA – Return on Assets, EVA – Economic Value Added) and market-based measures (TQ - Tobin’s Q, TSR – Total Shareholder Return) are used to measure the firm performance. Our key findings of this analysis are that total remuneration and the two accounting-based performance indicators ROA and SEVA, have a simultaneous relationship in Austria. For Germany, we found out that all remuneration components influence ROA significantly positively and that all remuneration components are statistically significantly influenced by ROA. Despite that, we found evidence for a simultaneous relationship between bonus and total remuneration, respectively, and SEVA and TQ. This research contributes to the literature since three perspectives of the relationship are considered; both accounting-based and market-based performance, with two indicators each, are used; and different remuneration components are considered instead of just analyzing total remuneration.