Next Article in Journal
A Pseudo-Bayesian Model for Stock Returns In Financial Crises
Previous Article in Journal
Are Entrepreneur-Led Companies Better? Evidence from Publicly Traded U.S. Companies: 1998-2010
Article Menu

Article Versions

Export Article

Open AccessArticle
J. Risk Financial Manag. 2011, 4(1), 1-42; doi:10.3390/jrfm4010001

Corporate Governance and Corporate Creditworthiness

Finance Department, College of Business, BSN 3127, University of South Florida, 4202 E. Fowler Ave., Tampa, FL 33620 – 5500, USA
Published: 31 December 2011
Download PDF [263 KB, uploaded 28 August 2013]

Abstract

We examine the relation between corporate governance and bankruptcy risk as an underlying force affecting a bond’s yield. The level of corporate governance is captured by the G-index, along with the explicit groups of governance provisions. We estimate bankruptcy risk by Z-score, by cash-flow-score, by O-score, through Merton structural model default probabilities, and by S&P credit ratings. After addressing endogeneity and while controlling for firm-specific factors, based on the four objective methodologies we find that corporate governance is inversely related to bankruptcy risk. Yet, rating agencies take a mixed approach towards this association likely because of the conflicting impact of different governance provisions.
Keywords: Corporate governance; bankruptcy risk; G-index; endogeneity tests; corporate governance provisions Corporate governance; bankruptcy risk; G-index; endogeneity tests; corporate governance provisions
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

Scifeed alert for new publications

Never miss any articles matching your research from any publisher
  • Get alerts for new papers matching your research
  • Find out the new papers from selected authors
  • Updated daily for 49'000+ journals and 6000+ publishers
  • Define your Scifeed now

SciFeed Share & Cite This Article

MDPI and ACS Style

Parnes, D. Corporate Governance and Corporate Creditworthiness. J. Risk Financial Manag. 2011, 4, 1-42.

Show more citation formats Show less citations formats

Related Articles

Article Metrics

Article Access Statistics

1

Comments

[Return to top]
J. Risk Financial Manag. EISSN 1911-8074 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top