Title: Do rated firms outperform non-rated peers in the Gulf Co-operation Council region?

Authors: Etumudon Ndidi Asien

Addresses: Department of Accounting and Finance, Faculty of Business and Management Sciences, Federal University Otuoke, P.M.B 126 Yenagoa, Bayelsa State, Nigeria

Abstract: This paper examines the financial performance of rated and non-rated listed firms in the Gulf Co-operation Council (GCC) region. It also examines the relationship between financial performance and leverage of rated and non-rated firms. We expect a difference in the financial performance of rated and non-rated firms. The sample consists of 105 rated and an equally-matched sample of non-rated firms in the GCC region. Our parametric t-tests indicate that there are statistically significant differences in leverage and equity multiplier of rated and non-rated firms; but there are no differences in capital intensity, profit margin, earnings per share, and fixed assets intensity of the two groups. Results from multiple cross-sectional panel regression tests indicate that there is a statistically significant relationship between leverage and all the financial performance measures, except for profit margin.

Keywords: credit rating agencies; CRAs; GCC region; Gulf Co-operation Council; leverage; capital intensity; profit margin; earnings per share; fixed assets intensity; equity multiplier; financial performance.

DOI: 10.1504/AAJFA.2015.067826

Afro-Asian Journal of Finance and Accounting, 2015 Vol.5 No.1, pp.37 - 55

Accepted: 22 Oct 2014
Published online: 18 Mar 2015 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article