Effect of Corporate Governance on Bond Ratings and Yields: The Role of Institutional Investors and Outside Directors

@inproceedings{Bhojraj2001EffectOC,
  title={Effect of Corporate Governance on Bond Ratings and Yields: The Role of Institutional Investors and Outside Directors},
  author={Sanjeev Bhojraj and Partha Sengupta},
  year={2001}
}
This article provides evidence linking corporate governance mechanisms to higher bond ratings and lower bond yields. Governance mechanisms can reduce default risk by mitigating agency costs and monitoring managerial performance and by reducing information asymmetry between the firm and the lenders. We find firms that have greater institutional ownership and stronger outside control of the board enjoy lower bond yields and higher ratings on their new bond issues. However, concentrated… CONTINUE READING

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