The impact of corporate governance and state ownership on the default probabilities of Chinese firms

Lorne Switzer, Jun Wang and Yuehao Jiang

Emerging Markets Review, 2024, vol. 60, issue C

Abstract: This study investigates the impact of state ownership and corporate governance mechanisms on the default risk in China since the sanctioning of default of state-owned firms in 2014. We find a positive relationship between inside ownership and default risk for both state-owned and non-state-owned firms. Institutional ownership serves as a monitoring mechanism that reduces default risk, irrespective of state ownership. Non-state-owned firms with CEO duality have higher default probabilities. Larger boards and more independent boards reduce the default probabilities of state-owned firms. Pandemic effects are less severe for state-owned firms.

Keywords: Credit risk; Default probability; Corporate governance; State ownership; Global pandemic (search for similar items in EconPapers)
JEL-codes: G15 G32 G33 G34 H12 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:60:y:2024:i:c:s1566014124000372

DOI: 10.1016/j.ememar.2024.101142

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