 Do credit rating concerns lead to better corporate governance? Evidence from KoreaFrederick L. Bereskin, Bushik Kim and Frederick Dongchuhl Oh Pacific-Basin Finance Journal, 2015, vol. 35, issue PB, 592-608 Abstract: We study the 1997 Asian financial crisis to show that credit rating concerns affect firms' corporate governance. We treat the crisis as an exogenous shock that led to improvements in the informativeness of Korea's credit rating system, and we determine that credit rating concerns affect corporate governance following the crisis but not before the crisis. Moreover, this effect is concentrated in firms that are in chaebol business groups, consistent with their increased dependence on external financing. Finally, we find that firms that were particularly affected by the reforms demonstrate an increased reliance on debt that is dependent on credit ratings, consistent with our hypothesized effects of this exogenous shock. Our paper presents a novel approach to evaluating whether managers would improve their firms' corporate governance in response to their credit rating concerns, and it highlights the wide-ranging effects of reforms that are implemented due to financial crises. Keywords: Credit ratings (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:35:y:2015:i:pb:p:592-608 DOI: 10.1016/j.pacfin.2015.10.005 Access Statistics for this article Pacific-Basin Finance Journal is currently edited by K. Chan and S. Ghon Rhee More articles in Pacific-Basin Finance Journal from Elsevier |
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