Corpus ID: 55471484

Corporate Governance and Risk of Default

@inproceedings{Wang2010CorporateGA,
  title={Corporate Governance and Risk of Default},
  author={Chia-Jane Wang and Jane-Raung Lin},
  year={2010}
}
Using 201 bankrupt and 2,751 non-bankrupt firms from the Investor Responsibility Research Center (IRRC) U.S. dataset for the period 1990-2006, we show that the rules of governance have a significant nonlinear impact on bankruptcy risk. In general, the likelihood of default is negatively related to the number of governance provisions, which allow managers to fend off challenges from shareholders. This finding supports the view that risk-averse managers prefer conservative policy choices. In… Expand
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