Data for The Effects of Sovereign Rating and Corporate Governance on the Capital Structure of Latin American Companies / published byBAR - Brazilian Administration Review

This study analyzed the effects of sovereign rating and corporate governance (GC) on the capital structure of Latin American companies. A multilevel regression model was used for 823 companies listed on the main Latin American exchanges in the period of 2004-2018. The results show that the firm level is most responsible for the variation in the capital structure of companies, while the country level had the greatest influence on the variation in long-term debt. In the absence of GC mechanisms, the sovereign rating is one of the factors not controlled by managers that can explain the capital structure of Latin American companies, which reduce their debt levels to protect themselves against changes in the sovereign rating of their countries. The results indicated that even having an audit committee and maintaining independent members on this committee, firms choose to reduce their debt levels, to protect themselves against constant variations in the sovereign rating of their respective countries. The results show that Corporate Governance mechanisms do not act in isolation when it comes to reducing agency problems.