Corporate Governance and Corporate Bond Liquidity

Hyun Jin Lee, Insook Cho

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

Using a unique dataset of corporate bond trading information and corporate governance evaluation scores, this study examines the determinants of corporate bond market liquidity in Korea. In particular, this study explores whether corporate governance performance of a company influences liquidity of bonds issued by the company. The paper reports three important findings. First, the issue size and age of bond are important determinants of bond liquidity. Second, liquidity of corporate bonds is influenced by changes in macroeconomic conditions. Third, and most importantly, better corporate governance increases liquidity of corporate bonds. This result suggests that corporate governance is an important determinant of bond liquidity, as it lowers transaction costs by improving transparency and reducing asymmetry of information. This paper contributes to the literature by providing new evidence that corporate governance performance is an important determinant of liquidity in corporate bond markets.

Original languageEnglish
Pages (from-to)189-205
Number of pages17
JournalGlobal Economic Review
Volume45
Issue number2
DOIs
Publication statusPublished - 2016 Apr 2

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liquidity
corporate governance
determinants
market
transaction costs
Corporate bonds
Corporate governance
Liquidity
asymmetry
macroeconomics
Korea
transparency
performance
evaluation
evidence

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Political Science and International Relations

Cite this

Lee, Hyun Jin ; Cho, Insook. / Corporate Governance and Corporate Bond Liquidity. In: Global Economic Review. 2016 ; Vol. 45, No. 2. pp. 189-205.
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Corporate Governance and Corporate Bond Liquidity. / Lee, Hyun Jin; Cho, Insook.

In: Global Economic Review, Vol. 45, No. 2, 02.04.2016, p. 189-205.

Research output: Contribution to journalArticle

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