Impact of Corporate Governance on Credit Ratings: An Empirical Study in the Indian Context

Arora, Taruntej Singh

doi:10.1177/0974686220966808

Cited by 9 publications

(8 citation statements)

References 43 publications

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“…MULD is operationalized as the percentage of directors serving on three or more additional board seats in each FY (Kohli, 2018). BMEET is operationalized as the total number of board meetings held annually (Arora, 2020; Aslam and Haron, 2021). BGEN is measured as the number of women directors on the board as on March 31 every year (Kohli, 2018; Amin et al , 2022).…”

Section: Methodsmentioning

confidence: 99%

Board characteristics and CEO turnover–performance relationship: evidence from India

Jatana

2022

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Purpose This paper aims to investigate the impact of board characteristics on CEO turnover performance relationship (TPR) in Indian listed firms. Design/methodology/approach A subset of the Standard and Poor’s Bombay Stock Exchange 500 (S&P BSE 500) Index companies was analyzed over the period 2015–2019 using the logistic (fixed-effects) regression model. Findings It was found that a weak relationship exists between CEO turnover and firm performance. With respect to board characteristics, board size was found to have a significant role in strengthening the TPR. However, other characteristics, such as board independence, multiple directors, board meetings and board gender diversity, played no role in influencing the TPR. Research limitations/implications First, the study period is limited to five years, during which several sample firms did not face any CEO turnover event leading to small sample size. Second, this study considers only the board’s gender diversity, whereas other types of diversity are omitted. Third, this study does not differentiate between insider and professional CEOs. Practical implications The findings suggest that regulators should focus on the effective enforcement of laws to strengthen the TPR and improve the monitoring role of boards, particularly in emerging economies like India, which face type II agency problems in addition to traditional principal–agent conflict. The results also offer implications for corporations, investors and academic researchers, highlighting areas that need considerable attention pertaining to corporate governance. Originality/value This study discerns the impact of several board-related characteristics on the TPR, particularly after the introduction of the new Companies Act 2013 in the emerging economy of India, where it has not been explored extensively.

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Section: Methodsmentioning

confidence: 99%

Board characteristics and CEO turnover–performance relationship: evidence from India

Jatana

2022

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“…Credit ratings are an important instrument of governance. Another body of research demonstrates that company governance is a crucial factor in rating agencies' credit ratings (Arora, 2020).…”

Section: Corporate Governance Mechanism Of Bond Ratingmentioning

confidence: 99%

Analysis of The Effect Earnings Management, Financial Ratios, Governance On Bond

Hartono

Krisdiana

Purwanggono

et al. 2022

Quant. Econ. Manag. Stud.

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The purpose of this study is to analyze the concentration on board profit factors, the proportion of liquidity, administrative ownership and review quality used to anticipate organizational security ratings. This study intends to provide experimental evidence that board income, monetary proportion and corporate administrative mechanisms affect security ratings. The subject of this exploration is an organization listed on the IDX and registered in Indonesia, PT. PEFINDO 2016-2019. Information check using strategic relapse investigation. The results showed that executive earnings, the proportion of liquidity, administrative ownership and review quality had an effect on bond ratings. While action proportion, market price proportion, institutional ownership and free head have no impact on security evaluation.

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“…Since the global crises, Good Governance and credit risk control are becoming hot topics for researchers and practitioners. Although, less research is looking at the association between corporate governance and credit rating (Arora, 2020;Rihab Grassa, 2016;Lin et al, 2020b; M. Mansoor, N. Ellahi, & Q. A. J. I. T. J. E. M. A. S. T. Malik, 2019b;Seetharaman, Patwa, & Nagarajan, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Research on corporate governance and credit rating shows that numerous company-specific financial characteristics affect credit ratings (Arora, 2020;Huu Nguyen, Thuy Doan, & Ha Nguyen, 2020;Mansoor et al, 2019a;Sarwar et al, 2022). LEV, ROA, total debt, and (LSIZE).…”

Section: Control Variables/firm-specific Variablesmentioning

confidence: 99%

The influence of Corporate Governance on Credit Rating in Pakistan

Salman

Ayaz

Riaz

et al. 2022

International Journal of Social Science Entrepreneurship

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Credit rating agencies have great significance in the growth of the financial industry by giving confidence to borrowers and lenders through expressing their opinion on the ability of the institution to meet its financial obligation through credit ratings. Therefore, if the governance structure is weak, credit rating agencies are likely to expect poor financial position and vulnerability of the stakeholders' interests. The purpose of this study is to determine whether the corporate governance characteristics of Islamic banks influence Islamic banks' credit ratings. Data is calculated from the annual reports of 22 banks in Pakistan for 14 years from 2007 to 2014. The results show that the board size, board members' independence, CEO tenure, blockholders, foreign investors, Shariah board size, education levels of Shariah supervisors, and Shariah board expertise negatively affect credit rating when bank-specific financial variables are used as the control variables. On the other hand, credit rating is positively correlated with board independence, foreign directors, women directors, board meetings, listing shares, size of audit committee members, audit committee meetings, changes in the structure of the shariah supervisory board, and foreign shariah experts. As a result, Islamic banks in Pakistan show strong corporate governance, leading to better credit ratings.

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Impact of Corporate Governance on Credit Ratings: An Empirical Study in the Indian Context

Cited by 9 publications

References 43 publications

Board characteristics and CEO turnover–performance relationship: evidence from India

Board characteristics and CEO turnover–performance relationship: evidence from India

Analysis of The Effect Earnings Management, Financial Ratios, Governance On Bond

The influence of Corporate Governance on Credit Rating in Pakistan

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