Publication Details

Ali, S., Liu, B. & Su, J. (2018). Does corporate governance quality affect default risk? The role of growth opportunities and stock liquidity. International Review of Economics and Finance, 58 422-448.


A series of defaults, a distinctive corporate environment and inconclusive findings in literature make Australia an interesting case in which to investigate the association between corporate governance and default risk. Using a large panel of 1086 non-financial firms from 2001 to 2013, we find that better governed firms are strongly associated with a lower level of default risk, and that the association is stronger among firms with more growth opportunities. Moreover, empirical evidence supports the role of stock liquidity as a channel of the relationship. Overall these findings have practical implications for the stakeholders in Australia.

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