Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence

Boubakri, Narjess; Ghouma, Hatem

doi:10.1016/j.jbankfin.2010.04.006

Cited by 224 publications

(172 citation statements)

References 60 publications

(91 reference statements)

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“…More specifically, we find that the existence and the enforcement of creditor laws are associated with higher bond rating, hence lower cost debt. This finding supports Ellul et al (2005) and Boubakri and Ghouma (2010).…”

Section: Discussionsupporting

confidence: 91%

“…Finally, we report a positive and coefficient for NEWS at the 10% level, suggesting that firms from countries with stronger extra-legal institutions are more likely to have higher bond ratings. Overall, these findings which are consistent with Ellul et al (2005) and Boubakri and Ghouma (2010), suggest that high quality legal and extra-legal institutions are associated with higher bond ratings.…”

Section: Multivariate Analysissupporting

confidence: 89%

“…Furthermore, the results of Panel B2 show that RATING is positively and significantly correlated with creditors' rights, public registry, and news circulation. This finding provides a support for Boubakri and Ghouma (2010) and suggests that stronger investor protection is associated with a higher bond ratings, hence a lower debt cost.…”

Section: Descriptive Statisticssupporting

confidence: 60%

“…Consequently, the costs of contracting debts (in the form of bonds) would be lower since creditors ask for relatively lower premiums to lend their money. This finding adds to the literature on the impact of auditor choice on debt cost and bond rating (e.g., Pittman & Fortin, 2004;Boubakri & Ghouma, 2010) by providing an international evidence on the role of auditing firms in reducing debt costs.…”

Section: Discussionmentioning

confidence: 51%

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Auditor Choice and Corporate Bond Ratings: International Evidence

Ben‐Nasr¹,

Ghouma²,

Alami³

2013

IJEF

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Using a sample of 823 firms from 35 countries, we examine the impact of auditor's choice on bonds ratings. An Ordered Probit Regression Model was used to identify how the auditor choice affects the probability of bond ratings. We find strong evidence that the auditor's choice significantly affects the bond ratings. The model also shows that the quality of legal and extra-legal institutions plays an important role in improving debt ratings. More specifically, we find that the existence and the enforcement of creditor laws are associated with higher bond rating.

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Section: Discussionsupporting

confidence: 91%

Section: Multivariate Analysissupporting

confidence: 89%

Section: Descriptive Statisticssupporting

confidence: 60%

Section: Discussionmentioning

confidence: 51%

See 2 more Smart Citations

Auditor Choice and Corporate Bond Ratings: International Evidence

Ben‐Nasr¹,

Ghouma²,

Alami³

2013

IJEF

Self Cite

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“…Masulis et al (2009) show that larger divergence between voting rights and the equity ownership of insiders (i.e., officers and directors) is associated with lower value of cash holdings, higher CEO compensation, value-destroying acquisitions and unprofitable capital expenditures. In support of this agency view, Boubakri and Ghouma (2010) find that the cost of borrowing increases with excess control rights. Gompers et al (2010) claim that insiders of dual-class firms often hold voting rights in excess of cash-flow rights, and that U.S. firms are more likely to adopt dual-class status when private benefits of control are relatively high.…”

Section: Excess Control Rights Firms' Geographic Location and Cash Hmentioning

confidence: 92%

Geographic location, excess control rights, and cash holdings

Boubaker

Derouiche²,

Lasfer

2015

International Review of Financial Analysis

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We assess the extent to which remotely-located firms are likely to discretionarily accumulate cash rather than distribute it to shareholders. We consider that these firms are less subject to shareholder scrutiny and, thus, will have high agency conflicts as the distance will facilitate the extraction of private benefits. Consistent with our predictions, we find a positive relation between the distance to the main metropolitan area and cash holdings, and this impact is more pronounced when the controlling shareholder has high levels of excess control rights (i.e., separation of cashflow rights and control rights). Our results hold even after accounting for all control variables, including financial constraints, and suggest that geographic remoteness can be conducive to severe agency problems, particularly when there is a large separation of cash-flow rights and control rights.JEL Classification: G30; G31; G32; G35.

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Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

et al. 2018

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The effect of carbon risk on the debt capital market has become increasingly prominent under carbon constraints. We use a panel regression model to examine the relationship between carbon risk and the cost of debt financing and the moderating effect of positive media attention on this relationship. Using a sample of 191 Chinese A‐share listed firms operating in high‐carbon industries covering the period 2011–15, we conduct an empirical study and find that the relationship between carbon risk and the cost of debt financing in China is a U‐shaped one. Thus, carbon risk exerts an “interval effect" on the cost of debt financing, which mainly exists in private firms rather than state‐owned firms. This relationship can be mitigated by positive media attention. Compared with private firms that receive low positive media attention, private firms with high positive media attention are more sensitive and less tolerant to environmental regulations. Our findings provide firms with practical advice on carbon risk management, particularly on improving carbon transparency and mitigating the cost of debt financing.

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Control/ownership structure, creditor rights protection, and the cost of debt financing: International evidence

Cited by 224 publications

References 60 publications

Auditor Choice and Corporate Bond Ratings: International Evidence

Auditor Choice and Corporate Bond Ratings: International Evidence

Geographic location, excess control rights, and cash holdings

Carbon risk, cost of debt financing and the moderation effect of media attention: Evidence from Chinese companies operating in high‐carbon industries

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