Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/178528 
Authors: 
Year of Publication: 
2011
Citation: 
[Journal:] Journal of Risk and Financial Management [ISSN:] 1911-8074 [Volume:] 4 [Issue:] 1 [Publisher:] MDPI [Place:] Basel [Year:] 2012 [Pages:] 1-42
Publisher: 
MDPI, Basel
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.
Subjects: 
Corporate Governance
Bankruptcy Risk
G-index
Endogeneity Tests
Corporate Governance Provisions
JEL: 
G33
G34
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-sa Logo
Document Type: 
Article

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