Do credit rating concerns lead to better corporate governance? Evidence from Korea

Cited 10 time in webofscience Cited 0 time in scopus
  • Hit : 338
  • Download : 0
We study the 1997 Asian financial crisis to show that credit rating concerns affect firms' corporate governance. We treat the crisis as an exogenous shock that led to improvements in the informativeness of Korea's credit rating system, and we determine that credit rating concerns affect corporate governance following the crisis but not before the crisis. Moreover, this effect is concentrated in firms that are in chaebol business groups, consistent with their increased dependence on external financing. Finally, we find that firms that were particularly affected by the reforms demonstrate an increased reliance on debt that is dependent on credit ratings, consistent with our hypothesized effects of this exogenous shock. Our paper presents a novel approach to evaluating whether managers would improve their firms' corporate governance in response to their credit rating concerns, and it highlights the wide-ranging effects of reforms that are implemented due to financial crises.
Publisher
ELSEVIER SCIENCE BV
Issue Date
2015-11
Language
English
Article Type
Article
Keywords

DIVERSIFIED BUSINESS GROUPS; INTERNAL CAPITAL-MARKETS; FIRM VALUE; BOND; ANNOUNCEMENTS; INVESTORS; DIRECTORS; CHAEBOLS; QUALITY; DEBT

Citation

PACIFIC-BASIN FINANCE JOURNAL, v.35, pp.592 - 608

ISSN
0927-538X
DOI
10.1016/j.pacfin.2015.10.005
URI
http://hdl.handle.net/10203/205942
Appears in Collection
MT-Journal Papers(저널논문)
Files in This Item
There are no files associated with this item.
This item is cited by other documents in WoS
⊙ Detail Information in WoSⓡ Click to see webofscience_button
⊙ Cited 10 items in WoS Click to see citing articles in records_button

qr_code

  • mendeley

    citeulike


rss_1.0 rss_2.0 atom_1.0