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Full-Text Articles in Business
Does Corporate Governance Quality Affect Default Risk? The Role Of Growth Opportunities And Stock Liquidity, Searat Ali, Benjamin Liu, Jen Je Su
Does Corporate Governance Quality Affect Default Risk? The Role Of Growth Opportunities And Stock Liquidity, Searat Ali, Benjamin Liu, Jen Je Su
Faculty of Business - Papers (Archive)
A series of defaults, a distinctive corporate environment and inconclusive findings in literature make Australia an interesting case in which to investigate the association between corporate governance and default risk. Using a large panel of 1086 non-financial firms from 2001 to 2013, we find that better governed firms are strongly associated with a lower level of default risk, and that the association is stronger among firms with more growth opportunities. Moreover, empirical evidence supports the role of stock liquidity as a channel of the relationship. Overall these findings have practical implications for the stakeholders in Australia.
Stock Liquidity, Corporate Governance And Leverage: New Panel Evidence, Sivathaasan Nadarajah, Searat Ali, Benjamin Liu, Allen Huang
Stock Liquidity, Corporate Governance And Leverage: New Panel Evidence, Sivathaasan Nadarajah, Searat Ali, Benjamin Liu, Allen Huang
Faculty of Business - Papers (Archive)
We examine the effect of stock liquidity and corporate governance on the firm's leverage decision in the order-driven stock trading system and less stringent governance environment of Australia. Using a sample of 1207 non-financial firms from 2001 to 2013, resulting in 9855 firm-year observations, we find the posited negative stock liquidity-leverage relation, confirming prior research observations that firms with more liquid stocks are significantly less leveraged. We also find a significant and negative relation between corporate governance quality (CGQ) and leverage, indicating that firms with high CGQ significantly reduce leverage. In a closer analysis, we find that the significantly negative …