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All Journal Jurnal Pengajaran MIPA Akuntansi Krida Wacana Jurnal Pengajaran Matematika dan Ilmu Pengetahuan Alam Journal of Indonesian Economy and Business Journal of Accounting and Management Innovation Jurnal Equity Sains & Matematika
Rinaningsih Rinaningsih
University of Indonesia
Astronomy Biochemistry, Genetics & Molecular Biology Chemistry Decision Sciences, Operations Research & Management Economics, Econometrics & Finance Mathematics Physics Other

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Journal : Journal of Indonesian Economy and Business

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THE INFLUENCE OF CORPORATE GOVERNANCE PRACTICE TOWARDS CREDIT AND BOND YIELDS Rinaningsih, Rinaningsih
Journal of Indonesian Economy and Business Vol 24, No 2 (2009): May
Publisher : Journal of Indonesian Economy and Business

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Abstract

The purpose of this study is to investigate whether there is a relationship between corporate governance practices and credit risk and bond yields. This study takes samplefrom companies that published bonds in 2006.First, we investigate the relationship between corporate governance practices and credit risk. Credit risk (default risk) can be measured by bond ratings (Billings, 1999).Using ordered probit regressions, we find evidence that the quality of transparency and financial information disclosure that proxied by big-4 auditors and audit committee havesignificant influence on bond ratings, but the relationship between block holders and institutional ownership is not significant on bond ratings. Second, we investigate the relationship between corporate governance practice and bond yields. Using multiple regressions, we find that corporate governance practices is not significant on bond yields. Then we put bond ratings in the equation, we find that bond ratings give incremental effect to the evidence. This evidence is consistent to Bradley et.al, (2007), that bond ratings are the prominent determinant for bond yields. Together with the bond ratings, the corporate governance practices (block holders, institutional ownership, big-4 auditors) have significant influence on bond yields.Keywords: bond ratings, bond yields, corporate governance, credit risk, default risk
Co-Authors Adhimukti, Andyan Ayu, Venanda Risma Kurnia Farhana, Siti Feldo, Ferix Kamila, Nadzifatul Karinda, Dheani Nadya Nurazizah, Rizkiana Putri, Yoriska Noventi Retno Yuliati Suranto, Felicia