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Mechanisms of corporate governance and fixed asset revaluation

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  • Senda Wali

Abstract

This study investigates the relation between the mechanisms of corporate governance and the fixed-asset revaluation decision in the Tunisian context. We also test the impact of firm size, listing status, previous accumulated losses and leverage (control variables) on the choice of whether to revalue assets. Based on a sample of 91 listed and non-listed firms, logistic regression shows that revaluation decision increases with the proportion of shares held in blocks by institutional investors. In addition, we report clear evidence that firms with previous accumulated losses and highly leveraged firms, which are close to and want to avoid default on their debt covenants, are more likely to revalue assets. These findings suggest that revaluation is used as a tool to improve creditors' perception of the financial health of the firm and thereby improve the firm's borrowing capacity.

Suggested Citation

  • Senda Wali, 2015. "Mechanisms of corporate governance and fixed asset revaluation," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 5(1), pages 82-97.
    • Handle: RePEc:ids:intjaf:v:5:y:2015:i:1:p:82-97
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    Cited by:

    1. Md. Tahidur Rahman & Syed Zabid Hossain & Md. Anwarul Haque, 2021. "Timing, Recurrence, and Effects of Fixed Asset Revaluation: Evidence from Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 11(2), pages 67-75.

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