Corporate governance disclosure and the assessment of default risk

Paper

James, Christina and Cotter, Julie. 2007. "Corporate governance disclosure and the assessment of default risk." OBEC 2007: Oxford Business and Economics Conference. Oxford, United Kingdom 24 - 26 Jun 2007 Oxford, United Kingdom.
Paper/Presentation Title

Corporate governance disclosure and the assessment of default risk

Presentation TypePaper
AuthorsJames, Christina (Author) and Cotter, Julie (Author)
Journal or Proceedings TitleProceedings of the Oxford Business and Economics Conference (OBEC 2007)
Number of Pages11
Year2007
Place of PublicationOxford, United Kingdom
ISBN9780974211473
Web Address (URL) of Paperhttp://www.gcbe.us/2007_OBEC/data/Christina%20James,%20Julie%20Cotter.doc
Conference/EventOBEC 2007: Oxford Business and Economics Conference
Event Details
OBEC 2007: Oxford Business and Economics Conference
Event Date
24 to end of 26 Jun 2007
Event Location
Oxford, United Kingdom
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.

Keywordscorporate governance; risk; disclosures
ANZSRC Field of Research 2020350103. Financial accounting
350799. Strategy, management and organisational behaviour not elsewhere classified
350102. Auditing and accountability
Public Notes

No evidence of copyright restrictions on web site.

Byline AffiliationsFaculty of Business
School of Accounting, Economics and Finance
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