Do rated firms outperform non-rated peers in the Gulf Co-operation Council region?. (1st January 2015)

• Record Type: Journal Article
• Authors: Asien, Etumudon Ndidi
• Is Part Of: Afro-Asian journal of finance and accounting. Volume 5:Number 1(2015)
• Page Start: 37
• Page End: 55
• Publication Date: 2015-01-01
• Subjects: credit rating -- credit rating agencies -- CRAs -- GCC region -- leverage -- capital intensity -- profit margin -- earnings per share -- fixed assets intensity -- equity multiplier -- financial performance; Accounting -- Africa -- Periodicals; Accounting -- Asia -- Periodicals; Accounting -- Middle East -- Periodicals; 657.0917165
• DOI: 10.1504/AAJFA.2015.067826
• Languages: English
• ISSNs: 1751-6447

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.