Corporate governance and access to interest bearing debt

Aldamen, Husam; Duncan, Keith

doi:10.1108/19852511211273697

Cited by 4 publications

(3 citation statements)

References 41 publications

(73 reference statements)

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“…Dittmar et al (2003) found that in a country with poor protection of shareholder rights, the asymmetry of information and investment opportunities does not have a significant impact on cash holding behaviors. Aldamen and Duncan (2012) found a relationship between corporate governance and the level of debt financing. Firms with higher levels of corporate governance have higher leverage and lower cost of debt.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Political connections, financing decisions and cash holdings: empirical evidence from Gulf Cooperation Council

Tawfik

Elmaasrawy²,

Albitar³

2022

JFRA

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Purpose This study aims to investigate the relationship between political connections, financing decisions and cash holding. Design/methodology/approach Based on historical data from 181 active non-financial firms listed on Gulf Cooperation Council (GCC) Stock Exchange Markets during the period of 2009–2016, this study uses ordinary least squares and dynamic system-generalized method of moments to test the research hypotheses. The final data set comprises a total of 1,448 firm-year observations from ten major non-financial industry classifications. Findings This study finds a positive relationship between political connections and each of internal financing proxied by retained earnings ratio and external financing proxied by short- and long-term debt to total asset. The findings also show a positive relationship between political connections and cash holding. Practical implications The findings of the study provide a better understanding of the role of politically connected directors in financing decisions and cash holding in the GCC. Investors can consider the presence of royal family members in the board of directors when making investment decision. Policymakers are encouraged to develop more effective policies that encourage listed firms to provide information on the political positions of the board of directors, managers and major shareholders/owners of companies. Originality/value This study contributes to the literature by providing empirical evidence on the relationship between political connections and financing decisions by focusing on the GCC region. This study also highlights that boards in connected firms in the GCC have lower monitoring role owing to political interventions, and that connected firms face higher agency problems as they have weak governance and boards compared with non-connected firms.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Political connections, financing decisions and cash holdings: empirical evidence from Gulf Cooperation Council

Tawfik

Elmaasrawy²,

Albitar³

2022

JFRA

View full text Add to dashboard Cite

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“…This finding suggests that banks give greater importance to audited financial information when deciding the interest rate. Aldamen and Duncan (2012) investigated the relationship between corporate governance and whether or not companies are able to access interest bearing debt in Australia. They found that debt companies have better corporate governance suggesting that the likelihood of accessing interest bearing debt is related to governance level.…”

Section: Review Of Empirical Literature and Hypotheses Developmentmentioning

confidence: 99%

The effects of audit quality on the costs of capital of firms in Ghana

Coffie

Bedi

Amidu

2018

JFRA

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Purpose This paper aims to investigate the effects of audit quality on the cost of capital in Ghana. Design/methodology/approach Non-financial firms listed on the Ghana Stock Exchange (GSE) as well as non-listed firms from the database of Ghana Club 100 were included in the sample. Series are yearly, covering a sample of 40 firms during the six-year period, 2008-2013. The study employed the positivist research paradigm to establish the relationship between audit quality and the cost of capital. Findings There is evidence to suggest that the cost of debt and the overall cost of capital of firms in Ghana can be explained by the quality of the external auditors. The results also show that the large size of the board is associated with low cost of debt. Research limitations/implications The fact that the choice of quality measure is based on firm size only and other measurements of audit quality could not be measured. Future research may examine how other approaches to measuring audit quality affect cost of capital. Practical implications The results significant for those charged with assurance and regulation, as well as lenders and managers of companies. Originality/value The authors investigate how external auditing quality affects the cost of capital of firms operating in Ghana.

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“…Companies that implement higher governance are more likely to access interest bearing debt. Here the core driver is that companies with no-debt have systematically lower governance than all other companies (Aldamen and Duncan, 2012). Nini et al (2012) provided evidence that creditors play an active role in the governance of corporations.…”

Section: Debtmentioning

confidence: 99%

Study on theories and mechanisms of corporate governance

Mishra

Kapil

2017

IJAAPE

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This paper aims to review the theories of corporate governance for understanding the theoretical basis of corporate governance mechanisms. Major theoretical studies on corporate governance, including studies done in emerging economies, are included in the review. The paper looks at corporate governance theories from value creation point of view. It is observed that the two perspectives of corporate governance, i.e., shareholder and stakeholder perspectives, are not in contrast to each other but are pointing towards the same goal, i.e., value creation. However, one points towards value creation for shareholders and the other points towards creation of societal value. While reviewing theoretical underpinnings and assumptions for corporate governance perspectives, due consideration has been given to the development of corporate governance mechanism based on various existing theories. A theoretical framework for understanding the relationship between corporate governance mechanism and corporate performance has been proposed. Emerging challenges for corporate governance theories have also been indicated. This being a review paper, one of the major limitations is an unintentional omission of some literature because of non-availability or non-reachability. Literature that would have been present in languages other than English could also not been included in the review.

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Corporate governance and access to interest bearing debt

Cited by 4 publications

References 41 publications

Political connections, financing decisions and cash holdings: empirical evidence from Gulf Cooperation Council

Political connections, financing decisions and cash holdings: empirical evidence from Gulf Cooperation Council

The effects of audit quality on the costs of capital of firms in Ghana

Study on theories and mechanisms of corporate governance

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