Key Words: Economic policy uncertainty; Corporate governance; Board diversity; Cost of debt
JEL Classifications: G23, G34
학회소식
[2019년 제 4차] What Matters During Bad Times? Evidence from the Bond Market
작성자 : 관리자
조회수 : 38
게시일 :
2019-12-13
We examine whether corporate characteristics mitigate the adverse effect of policy-induced
uncertainty on the cost of debt financing. Using a large sample of publicly traded bonds over the
period 1993–2015, we find that firms with more independent and less busy boards moderate the
positive relation between policy uncertainty and yield spreads. We also find that greater cultural
diversity within the board membership and cultural distance between the board—especially the
audit committee—and the CEO attenuates the adverse effect of policy uncertainty. Further testing
shows that the presence of other external monitors such as Big 4 auditors, financial analysts, and
long-term institutional investors matters during high policy uncertainty periods. Our results
suggest that change in bondholders’ assessment of firm performance during periods of high policy
uncertainty is a function of differences in corporate characteristics.
