Governance-default risk relationship and the demand for intermediated and non-intermediated debt

Husam Aldamen, Keith Duncan, Safdar Khan

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This paper explores the impact of corporate governance on the demand for intermediated debt (asset finance, bank debt, non-bank private debt) and non-intermediated debt (public debt) in the Australian debt market. Relative to other countries the Australian debt market is characterised by higher proportions of intermediated or private debt with a lower inherent level of information asymmetry in that private lenders have greater access to financial information (Gray, Koh & Tong 2009). Our firm level, cross-sectional evidence suggests that higher corporate governance impacts demand for debt via the mitigation of default risk. However, this relationship is not uniform across all debt types. Intermediated debt such as bank and asset finance debt are more responsive to changes in governance-default risk relationship than non-bank and non-intermediated debt. The implication is that a firm's demand for different debt types will reflect its governance-default risk profile.
Original languageEnglish
Pages (from-to)25-42
Number of pages18
JournalAustralasian Accounting, Business and Finance Journal
Volume6
Issue number3
Publication statusPublished - 1 Jul 2012

Fingerprint

Default risk
Debt
Governance
Corporate governance
Private debt
Assets
Debt finance
Financial information
Bank debt
Asymmetry of information
Proportion
Finance
Mitigation
Public debt

Cite this

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Governance-default risk relationship and the demand for intermediated and non-intermediated debt. / Aldamen, Husam; Duncan, Keith; Khan, Safdar.

In: Australasian Accounting, Business and Finance Journal, Vol. 6, No. 3, 01.07.2012, p. 25-42.

Research output: Contribution to journalArticleResearchpeer-review

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