Corporate governance and default prediction: a reality test

Fernando, Jayasuriya Mahapatabendige Ruwani; Li, Leon; Hou, Yang

doi:10.1080/00036846.2018.1558351

Cited by 16 publications

(16 citation statements)

References 61 publications

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“…Yet, Ashbaugh‐Skaife et al () find that large shareholders have a negative effect on credit ratings. Further, Elloumi and Gueyie (), Parker, Peters, and Turetsky () and Fernando, Li, and Hou () find that firms with concentrated ownership are more likely to default, suggesting poor credit quality. We employ the percentage of institutional ownership, the percentage of the five largest shareholders’ ownership, and blockholdership to measure ownership structure and influence.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 98%

Corporate governance and correlation in corporate defaults

Fernando

Hou

2020

Corporate Governance

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Research Question/Issue: This study examines the effect of weak corporate governance in terms of concentrated ownership, low board effectiveness, low financial transparency and higher shareholder rights on default correlation when firms have different credit qualities.Research Findings/Insights: Using historical default data in the United States from 2000 to 2015, we find that the degree of default correlation increases disproportionately for firms with concentrated ownership, low board effectiveness, low financial transparency and disclosures, and higher shareholder rights. More importantly, the effect of weak corporate governance on default correlation is high during a financial crisis.Theoretical/Academic Implications: This is one of the first studies testing the impact of corporate governance on the correlation in corporate defaults. It indicates new avenues of research for both corporate governance and credit risk management in relation to why joint default probabilities vary among firms.Practitioner/Policy Implications: Our results imply that good corporate governance is essential for credit risk management because poor corporate governance may increase individual default risk and create the domino effect of credit defaults. Practitioners and policy makers should enhance control over poor governance practices to reduce the probabilities of default. Moreover, the impact of corporate governance on correlation in corporate defaults is more pronounced in financial crises and warrants consideration from policy makers to take steps toward cushioning its effects. K E Y W O R D S corporate governance, credit quality, default correlation

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 98%

Corporate governance and correlation in corporate defaults

Fernando

Hou

2020

Corporate Governance

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“…Regarding limitations, other aspects that could influence hotel businesses' bankruptcy were not considered by the present study, such as factors related to corporate governance. Recent empirical studies' results indicate that companies' failure is associated with more concentrated ownership, weak shareholder rights, poor financial transparency and a less effective board of directors [72]. Female CEOs further promote more active boards of directors when the boards reach the critical mass of at least three female members, and, in turn, gender-balanced boards are more likely to replace low-performing CEOs [71].…”

Section: Limitations and Future Lines Of Researchmentioning

confidence: 99%

Gender and Bankruptcy: A Hotel Survival Econometric Analysis

Escribano-Navas¹

2021

Sustainability

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This study’s objective was to understand how chief executive officers’ (CEOs) gender affects hotel businesses’ survival. Female managers’ influence has already been examined in other sectors, but researchers have not studied women CEOs’ role in hotel management and survival. A sample of 2615 Spanish hotel companies was examined during the period 2005–2018 for how their survival was affected by the variables of financial aspects, years of experience and the principal hotel executive’s gender. An econometrics-based survival analysis was conducted using a single complementary log-log model and panel data. The results indicate that some financial variables, such as sales, working capital to total assets ratio and each company’s experience, influence hotel businesses’ survival. The main finding was that women CEOs increase hotels’ survival rate. This CEO gender study is a novelty in the literature on hotel survival.

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“…In other words, CSR investments will serve as a buffer for the company during downturns. In general, companies with improved CSR efficiency are more transparent in reporting corporate details and place a higher priority on bond commitments and limitations (Fernando, Li & Hou, 2019).…”

Section: Social Practicesmentioning

confidence: 99%

The Influence of Environmental, Social and Governance Reporting on Firm Value: Malaysian Evidence

Ahmad¹,

Ayob²,

Zainon³

et al. 2021

IJARBSS

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Companies are expected to be more proactive in offering accurate and useful knowledge to their stakeholders. Consequently, companies must integrate Environmental, Social and Governance (ESG) elements into their business behaviour while ensuring the corporation earns long-term sustainable financial returns. Nevertheless, minimal studies are being performed to investigate the implications of incorporating the ESG components directly in financial areas on the efficiency of companies. ESG reporting are indicators of non-financial performance which will assist to determine the financial performance of the company. Hence, this paper aims to identify the standard of transparency based on various regulatory criteria for information on ESG reporting while exploring its impact on the firm value of the company among public listed companies in Malaysia. A total of 65 companies are selected from Bursa Malaysia for the financial data from 2017 to 2019 inclusive. The results indicate that there is a relationship between environmental practices and governance practices on firm value but no relationship between social practices on firm value. This study also showed that there is an improvement in ESG practices among the public listed companies in Malaysia over the three-year period. This study sheds light in the understanding of ESG reporting in the future.

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Corporate governance and default prediction: a reality test

Cited by 16 publications

References 61 publications

Corporate governance and correlation in corporate defaults

Corporate governance and correlation in corporate defaults

Gender and Bankruptcy: A Hotel Survival Econometric Analysis

The Influence of Environmental, Social and Governance Reporting on Firm Value: Malaysian Evidence

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