Corporate governance disclosure and the assessment of default risk

James, Christina and Cotter, Julie (2007) Corporate governance disclosure and the assessment of default risk. In: OBEC 2007: Oxford Business and Economics Conference, 24-26 Jun 2007, Oxford, United Kingdom.

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Abstract

This paper investigates whether the quality of a firm's corporate governance disclosures are inversely related to its assessed default risk. It is expected that high reported standards of corporate governance will reduce the assessment of a company's default risk by lenders, underwriters and ratings agencies, and therefore reduce the cost of debt for such companies. A corporate governance index based on annual report disclosures was developed to rate each company's corporate governance disclosure quality. Derivation of this index was centred on corporate governance indicators suggested by prior research and best practice; particularly the Australian Stock Exchange Principles of Good Corporate Governance and Best Practice Recommendations. The assessment of default risk is captured by a firm's individual credit rating supplied by Standard and Poor's. Our results indicate that annual report disclosures about corporate governance practices are not significantly related to assessed default risk.


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Item Type: Conference or Workshop Item (Commonwealth Reporting Category E) (Paper)
Refereed: Yes
Item Status: Live Archive
Additional Information: No evidence of copyright restrictions on web site.
Depositing User: Mrs Christina James-Overheu
Faculty / Department / School: Historic - Faculty of Business - School of Accounting, Economics and Finance
Date Deposited: 11 Oct 2007 01:23
Last Modified: 25 Sep 2013 04:42
Uncontrolled Keywords: corporate governance; risk; disclosures
Fields of Research (FOR2008): 15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150103 Financial Accounting
15 Commerce, Management, Tourism and Services > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150102 Auditing and Accountability
Socio-Economic Objective (SEO2008): E Expanding Knowledge > 97 Expanding Knowledge > 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
URI: http://eprints.usq.edu.au/id/eprint/3308

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