Bond Ratings, Corporate Governance, and Cost of Debt: The Case of Korea

• 발행기관: 한국유통과학회
• 저자명: Seung-Hun Han Kichun Kang Yoon S. Shin
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 3 No.3, 5~15쪽, 전체 11쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2016.08.31

영문 초록

This study examines whether Korean rating agencies such as Korea Investors Service (KIS), National Information & Credit Evaluation (NICE), and Korea Ratings Corporation (KR), incorporate corporate governance into their corporate bond ratings in Korea. We find that the Korean rating agencies assign higher ratings to the bonds issued by Chaebol (Korean business group) affiliated firms. Our results also indicate that those rating agencies give higher ratings to the bonds with greater foreign investor share ownership. Moreover, if the rating agencies value corporate governance, higher rated firms should issue bonds at lower yield to maturity. We discover that Chaebol affiliation is counted favorably by the rating agencies. We find that investors are willing to pay lower risk premium for bonds with higher institutional ownership, but higher risk premium to bonds with greater equity ownership in the form of depository receipts. Therefore, even if the rating agencies and investors in Korea consider corporate governance (Chaebol affiliation and ownership structure) an important determinant in bond ratings and the yields to maturity, they have opposite views on institutional ownership and share ownership in the form of depository receipts.

목차

1. Introduction

2. Literature Review

3. Hypothesis and Methodology

4. Empirical Results

5. Conclusions

References

키워드

Corporate Governance Cost of Debt Credit Ratings Korean Capital Markets