Surprises of Corporate Governance and Russian Firms Debt

Posted: 3 Apr 2019

See all articles by Tamara Teplova

Tamara Teplova

National Research University Higher School of Economics

Tatiana Sokolova

National Research University Higher School of Economics

Date Written: March 1, 2019

Abstract

Our paper investigates the effects of corporate governance features on the cost of publicly traded debt in the Russian market after the global financial crisis. We consider a wide range of corporate governance mechanisms and focus our analysis on three elements relevant for emerging capital markets: state-owned bond issuers, auditor power (Big 4 or local firms) and CEO power. As control variables, we consider financial and non-financial indicators of bond issuers, including proxies of intellectual capital and transparency indicators, characteristics of bond issues, structure and size of the Board of Directors. We apply linear and multiplication regressions for unbalanced panel data.

The original result is that, in the case of a sole executive body, bond spreads are higher. We find an inverse relation between the ex-post cost of public debt and audit power. The analysis also revealed a robust result that disclosing information on intangible assets and a larger Board of Directors reduce debtholder risks. According to our findings, debtholders take into account the risk of the influence of CEOs of large companies on local auditors, while for international auditors such influence is less possible. These results are robust to a large set of firm-specific and bond- specific characteristics.

Keywords: Audit Power, CEO Power, Corporate Governance, State-Owned Firms, Ruble Corporate Bonds, Cost of Debt

JEL Classification: G12, G3, C12, O34

Suggested Citation

Teplova, Tamara and Sokolova, Tatiana, Surprises of Corporate Governance and Russian Firms Debt (March 1, 2019). Journal of Economics and Business, Vol. 102, No. March-April, 2019. Available at SSRN: https://ssrn.com/abstract=3351095

Tamara Teplova

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Tatiana Sokolova (Contact Author)

National Research University Higher School of Economics ( email )

136, Rodionova street
25/12, Bolshaya pecherskaya street
Nizhniy Novgorod, 603155
Russia

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