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

Hiroyuki Aman (1) , Pascal Nguyen (2, 3)

1 School of Business Administration [Kwansei Gakuin]
2 Axe 2 (2011-2016) : « Marchés, Cultures de consommation, Autonomie et Migrations » (MSHS Poitiers)
3 UTS - University of Technology Sydney

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.

Mots clés: Credit rating; Cost of debt; Funding; Corporate governance; Monitoring; Disclosure

Domaines: Economies et finances

Hiroyuki Aman, Pascal Nguyen. Does good governance matter to debtholders ? Evidence from the credit ratings of Japanese firms. Research in International Business and Finance, 2013, 29, pp.14-34. ⟨10.1016/j.ribaf.2013.02.002⟩. ⟨halshs-01368904⟩