%0 Journal Article
%T Corporate Governance and Corporate Creditworthiness
%A Dror Parnes
%J Journal of Risk and Financial Management
%D 2011
%R 10.3390/jrfm4010001
%X 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.
%K Corporate governance
%K bankruptcy risk
%K G-index
%K endogeneity tests
%K corporate governance provisions
%U http://www.mdpi.com/1911-8074/4/1/1