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dc.contributor.authorFernando, Jayasuriya Mahapatabendige Ruwanien_NZ
dc.contributor.authorLi, Leonen_NZ
dc.contributor.authorHou, Yang (Greg)en_NZ
dc.date.accessioned2019-11-24T22:33:08Z
dc.date.available2019-11-24T22:33:08Z
dc.date.issued2019
dc.identifier.citationFernando, J. M. R., Li, L., & Hou, Y. (Greg). (2019). Corporate governance and correlation in corporate defaults. Corporate Governance: An International Review. https://doi.org/10.1111/corg.12306en
dc.identifier.issn0964-8410en_NZ
dc.identifier.urihttps://hdl.handle.net/10289/13188
dc.description.abstractManuscript Type Empirical Research Question/Issue This study examines the effect of weak corporate governance in terms of concentrated ownership, low board effectiveness, low financial transparency and higher shareholder rights on default correlation when firms have different credit qualities. Research Findings/Insights Using historical default data in the United States from 2000 to 2015, we find that the degree of default correlation increases disproportionately for firms with concentrated ownership, low board effectiveness, low financial transparency and disclosures, and higher shareholder rights. More importantly, the effect of weak corporate governance on default correlation is high during a financial crisis. Theoretical/Academic Implications This is one of the first studies testing the impact of corporate governance on the correlation in corporate defaults. It indicates new avenues of research for both corporate governance and credit risk management in relation to why joint default probabilities vary among firms. Practitioner/Policy Implications Our results imply that good corporate governance is essential for credit risk management because poor corporate governance may increase individual default risk and create the domino effect of credit defaults. Practitioners and policy makers should enhance control over poor governance practices to reduce the probabilities of default. Moreover, the impact of corporate governance on correlation in corporate defaults is more pronounced in financial crises and warrants consideration from policy makers to take steps toward cushioning its effects.
dc.language.isoenen_NZ
dc.publisherWileyen_NZ
dc.rightsThis is an author’s accepted version of an article published in the journal: Corporate Governance: An International Review. © 2019 Wiley.
dc.titleCorporate governance and correlation in corporate defaultsen_NZ
dc.typeJournal Article
dc.identifier.doi10.1111/corg.12306en_NZ
dc.relation.isPartOfCorporate Governance: An International Reviewen_NZ
pubs.elements-id249519
pubs.publication-statusPublished onlineen_NZ
dc.identifier.eissn1467-8683en_NZ
uow.identifier.article-nocorg.12306


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