Journal of Corporate Finance Vol. 65 2020
Board monitoring, director connections, and credit quality☆
Abstract
Firms with poor board monitoring effectiveness receive lower credit ratings and larger credit spreads. I identify these effects by using director deaths as exogenous shocks to monitoring effectiveness. These effects are especially pronounced when firms are highly levered. Incremental decreases in monitoring effectiveness impact credit quality the most when a majority of the board members become co-opted by management and when firms are more likely to increase corporate risk.
- DOI
- 10.1016/j.jcorpfin.2020.101726
- Volume
- 65
- Pages
- 101726
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref