Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Corporate governance and the probability of default

Corporate governance and the probability of default We employ Merton's probability of default as a continuous ex‐ante measure of the likelihood of firm failure and dynamic panel generalised method of moments to better characterise the relationship between corporate governance and the chance of default. In doing so, we overcome limitations of discrete proxies widely used in previous studies and more completely account for endogeneity issues permeating this area of research. While initial testing designed to facilitate comparison with previous studies suggests a significant relationship between the probability of default and executive pay, board structure and ownership structure, once endogeneity concerns are accounted for, no such relationship remains. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

Corporate governance and the probability of default

Loading next page...
 
/lp/wiley/corporate-governance-and-the-probability-of-default-T0EcEOBPDD

References (61)

Publisher
Wiley
Copyright
Accounting and Finance © 2017 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/acfi.12147
Publisher site
See Article on Publisher Site

Abstract

We employ Merton's probability of default as a continuous ex‐ante measure of the likelihood of firm failure and dynamic panel generalised method of moments to better characterise the relationship between corporate governance and the chance of default. In doing so, we overcome limitations of discrete proxies widely used in previous studies and more completely account for endogeneity issues permeating this area of research. While initial testing designed to facilitate comparison with previous studies suggests a significant relationship between the probability of default and executive pay, board structure and ownership structure, once endogeneity concerns are accounted for, no such relationship remains.

Journal

Accounting & FinanceWiley

Published: Apr 1, 2017

Keywords: ; ;

There are no references for this article.