Do rated firms outperform non-rated peers in the Gulf Co-operation Council region?
by Etumudon Ndidi Asien
Afro-Asian J. of Finance and Accounting (AAJFA), Vol. 5, No. 1, 2015

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.

Online publication date: Wed, 18-Mar-2015

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