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Cost of debt

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Internal Control Disclosures, Monitoring, And The Cost Of Debt, Dan Dhaliwal, Chris Hogan, Robert Trezevant, Michael Wilkins Feb 2015

Internal Control Disclosures, Monitoring, And The Cost Of Debt, Dan Dhaliwal, Chris Hogan, Robert Trezevant, Michael Wilkins

Michael S Wilkins

We test the relationship between the change in a firm's cost of debt and the disclosure of a material weakness in an initial Section 404 report. We find that, on average, a firm's credit spread on its publicly traded debt marginally increases if it discloses a material weakness. We also examine the impact of monitoring by credit rating agencies and/or banks on this result and find that the result is more pronounced for firms that are not monitored. Additional analysis indicates that the effect of bank monitoring appears to be the primary driver of these monitoring results. This finding is …


Corporate Governance, Risk Assessment And Cost Of Debt, Husam Aldamen, Keith Duncan, Ray Mcnamara Jul 2014

Corporate Governance, Risk Assessment And Cost Of Debt, Husam Aldamen, Keith Duncan, Ray Mcnamara

Ray McNamara

This paper examines the impact of corporate governance practices on the reported cost of contracted debt for Australian listed companies. Good governance decreases the variability in cash flows, reduces the probability of default (reduces default risk), increases the quality of value-relevant information disclosed (reduces the information risk) and thereby lowers the cost of debt (Ashbaugh-Skaife, Collins, and LaFond 2006; Sengupta 1998; Bhojraj and Sengupta 2003; Beekes and Brown 2006; Klein 2002; Easley and O'Hara 2004). Similarly our Australian data confirms that cost of debt is positively related to default and information risks. We show that increased corporate governance reduces default …


Corporate Governance, Risk Assessment And Cost Of Debt, Husam Aldamen, Keith Duncan, Ray Mcnamara Jul 2014

Corporate Governance, Risk Assessment And Cost Of Debt, Husam Aldamen, Keith Duncan, Ray Mcnamara

Keith Duncan

This paper examines the impact of corporate governance practices on the reported cost of contracted debt for Australian listed companies. Good governance decreases the variability in cash flows, reduces the probability of default (reduces default risk), increases the quality of value-relevant information disclosed (reduces the information risk) and thereby lowers the cost of debt (Ashbaugh-Skaife, Collins, and LaFond 2006; Sengupta 1998; Bhojraj and Sengupta 2003; Beekes and Brown 2006; Klein 2002; Easley and O'Hara 2004). Similarly our Australian data confirms that cost of debt is positively related to default and information risks. We show that increased corporate governance reduces default …