Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms

Aman, H; Nguyen, P

Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms

Aman, H Nguyen, P

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Publication Type:: Journal Article
Citation:: Research in International Business and Finance, 2013, 29 (1), pp. 14 - 34
Issue Date:: 2013-08-01

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Field	Value	Language
dc.contributor.author	Aman, H	en_US
dc.contributor.author	Nguyen, P	en_US
dc.date.issued	2013-08-01	en_US
dc.identifier.citation	Research in International Business and Finance, 2013, 29 (1), pp. 14 - 34	en_US
dc.identifier.issn	0275-5319	en_US
dc.identifier.uri	http://hdl.handle.net/10453/26400
dc.description.abstract	Consistent with existing evidence based on US firms, we show that good governance is associated with higher credit ratings. The most significant variables are institutional ownership and disclosure quality. This finding suggests that active monitoring (by large shareholders) and lower information asymmetry (through better disclosures) mitigate agency conflicts and reduce the risk to debtholders. Credit ratings are also found to increase with board size, consistent with a moderation effect in large decision-making groups. As a rule, firms are expected to benefit from better governance by being able to access funding at a lower cost and in larger amounts. © 2013 Elsevier B.V.	en_US
dc.relation.ispartof	Research in International Business and Finance	en_US
dc.relation.isbasedon	10.1016/j.ribaf.2013.02.002	en_US
dc.subject.classification	Finance	en_US
dc.title	Does good governance matter to debtholders? Evidence from the credit ratings of Japanese firms	en_US
dc.type	Journal Article
utslib.citation.volume	1	en_US
utslib.citation.volume	29	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Strength - CCG - Centre for Corporate Governance
utslib.copyright.status	closed_access
pubs.issue	1	en_US
pubs.publication-status	Published	en_US
pubs.volume	29	en_US

Abstract:

Consistent with existing evidence based on US firms, we show that good governance is associated with higher credit ratings. The most significant variables are institutional ownership and disclosure quality. This finding suggests that active monitoring (by large shareholders) and lower information asymmetry (through better disclosures) mitigate agency conflicts and reduce the risk to debtholders. Credit ratings are also found to increase with board size, consistent with a moderation effect in large decision-making groups. As a rule, firms are expected to benefit from better governance by being able to access funding at a lower cost and in larger amounts. © 2013 Elsevier B.V.

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http://hdl.handle.net/10453/26400