Paper Information

Journal:   FINANCIAL KNOWLEDGE OF SECURITY ANALYSIS (FINANCIAL STUDIES)   SUMMER 2016 , Volume 9 , Number 30; Page(s) 95 To 113.
 
Paper: 

EXAMINING THE EFFECT OF CORPORATE GOVERNANCE INDICATORS ON CREDIT RATINGS WITH REGARD TO THE EMS MODEL (CASE STUDY: TEHRAN STOCK EXCHANGE)

 
 
Author(s):  VAZIFEHDUST HOSEIN, AHMADVAND MAYSAM, SADEHVAND MOHAMMAD JAVAD*
 
* ISLAMIC AZAD UNIVERSITY, SCIENCE AND RESEARCH BRANCH OF TEHRAN
 
Abstract: 

This study reviews the impact of corporate governance indicators on credit ratings in a sample of firms listed on Tehran stock exchange. Regarding the absence of international credit rating agencies in Iran’s financial market, this paper firstly calculated credit ratings of selected firms using the emerging market score (EMS) model. The next step was dividing corporate governance indicators into four categories: shareholders’ and stakeholders’ rights, board of directors and its committees, auditing, and transparency and public disclosure. Based on each of these categories, a representative index, and by aggregating four representative indexes, a composite corporate governance index was built. Then, the relationship between these indexes and credit ratings was examined.
Results suggest that only governance indicators related to shareholders’ and stakeholders’ rightsare significantly positively correlated with credit ratings. However, combining these indicators with other governance indicators (that is, indicators related to board of directors and its committees, auditing, and transparency and public disclosure), did not have any significant influence on credit ratings of Tehran stock exchange listed firms.

 
Keyword(s): CREDIT RATING, EMS MODEL, CORPORATE GOVERNANCE, SHAREHOLDERS’ RIGHTS, TEHRAN STOCK EXCHANGE
 
References: 
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