Business Commons^™

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 …

Audit Committee Characteristics And Firm Performance During The Global Financial Crisis, Husam Aldamen, Keith Duncan, Simone Kelly, Ray Mcnamara, Stephan Nagel

Keith Duncan

We address the question ‘do governance enhancing audit committee (AC) characteristics mitigate the firm performance impact of significant-adverse-economic events such as the Global Financial Crisis (GFC)?’ Our analysis reveals that smaller audit committees with more experience and financial expertise are more likely to be associated with positive firm performance in the market. We also find that longer serving chairs of audit committees negatively impacts accounting performance. However, accounting performance is positively impacted where ACs include blockholder representation, the chair of the board, whose members have more external directorships and whose chair has more years of managerial experience. We contribute to …

Does Adopting Good Corporate Governance Enhance Accruals Quality During The Global Financial Crisis?, Husam Aldamen, Keith Duncan

Keith Duncan

This paper examines the impact of corporate governance practices on accruals quality during the global financial crisis (GFC). Prior research establishes linkages between good governance and accruals quality during periods of financial stability (Strydom 2008; Kent et al. 2010; Dhaliwal et al. 2010). We extend this analysis to the 2008-2009 GFC period to assess whether the monitoring and informational benefits of corporate governance mitigate the negative effects of the exogenous shock, thereby increasing accruals quality. Our findings show that good corporate governance practices increases accruals quality during the GFC. Furthermore, governance is shown to positively impact innate accruals quality and, …

Governance-Default Risk Relationship And The Demand For Intermediated And Non-Intermediated Debt, Husam Aldamen, Keith Duncan, Safdar Khan

Keith Duncan

This paper explores the impact of corporate governance on the demand for intermediated debt (asset finance, bank debt, non-bank private debt) and non-intermediated debt (public debt) in the Australian debt market. Relative to other countries the Australian debt market is characterised by higher proportions of intermediatedor private debt with a lower inherent level of information asymmetry in that private lenders have greater access to financial information (Gray, Koh & Tong 2009). Our firm level, cross-sectional evidence suggests that higher corporate governance impacts demand for debt via the mitigation of default risk. However, this relationship is not uniform across all debt …

Corporate Governance And Access To Interest Bearing Debt, Husam Aldamen, Keith Duncan

Keith Duncan

Purpose – The purpose of this paper is to extend the growing body of literature on the impact of corporate governance on debt contracting by examining if better governance is associated with access to interest bearing debt. The paper aims to explore whether no-debt companies have governance structures that are qualitatively different to debt companies within a market with a distinct corporate finance structure, such as Australia.

Design/methodology/approach – The analysis is portioned into two stages. The first stage focuses on univariate analysis which includes descriptive statistics and analysis of variance (ANOVA). The second stage introduces multivariate analysis, in the …

Empires Of The Mind: Cross Cultural Cooperative Business Education, Keith Duncan, Simone Kelly, Raymond Mcnamara

Keith Duncan

This paper explores current trends in knowledge growth and decay, globalization, technology and education. Business education in the new millennium is shaped by these trends. This contextual backdrop raises both educational and business issues which are explored with exemplars from a successful cross-cultural blended MBA program. The educational issues considered include educational relevance, lifelong learning objectives, education vs. training, needs of the target audience, what is the language of instruction, as well as issues of assessment and outcome measurement. The business issues include a fair return to all parties, responsibilities, management and communication systems and dispute resolution. In a globalized, …

Income Strategies Of Listed And Unlisted Companies: An Empirical Study Of Accounting Method Choices, Keith Duncan

Keith Duncan

This paper explores whether the political and contracting environments for listed and unlisted companies gives rise to different wealth incentives for management to judiciously select a portfolio of accounting procedures for the firm. The analysis indicates significant differences in the method choices made by the managers of listed and unlisted firms. For the listed firms, size as a proxy for political costs is negatively related to portfolio choice, supporting the political cost hypothesis. In addition, leverage and directors' percentage ownership are positively related to portfolio choice and thus support the debt contracting cost hypothesis. In contrast, none of the contracting …