Research On The Influence Of Internal Governance Factors On Corporate Bond Rating

Under the background of development of bond market in recent years,this paper studies the influence of corporate governance on credit rating of corporate bonds,including the issuer rating and bond rating.Based on the related data of corporate bonds of listed companies in China from 2007 to 2015,this paper selects multiple variables to reflect the company's internal governance level from four aspects,including the ownership structure and controlling shareholders,board of directors,executive ownership,financial transparency and information disclosure.Then,this paper analyzes the influence of corporate governance on the issuer rating and bond rating by Ordered Logit multiple linear regression empirical model respectively.Study found that:the internal governance factors have a certain impact on the issuer rating and bond rating,and the impact is focus on the ownership structure and controlling shareholder of the company internal governance factors,but the effect of other governance factors is not obvious.Specifically,after controlling the financial characteristics,the issuer rating has significant positive correlation with the proportion of the largest shareholder,state-owned holding,second to tenth shareholders and the proportion of executive ownership,while the issuer rating has significant negative correlation with the proportion of director ownership.Besides,after controlling financial characteristics and bond characteristics,the bond rating has significant positive correlation with state-owned shareholding and the proportion of executive ownership,while the bond rating has significant negative correlation with the proportion of director ownership.In addition,this paper also found that the characteristics of bonds,especially collateral could enhance the bond credit rating obviouslyIn a word,this paper argues that the internal governance factors are the important factors affecting the credit rating of corporate bonds.In the bond market,the rating agencies are more concerned about the ownership structure and controlling shareholders of companies,including the nature of equity and equity concentration.At the same time,this paper found that the change of corresponding governance indicators could improve the credit rating of corporate bonds,such as increasing the proportion of the largest shareholder.This will help to promote issuers pay more attention to the company's internal governance,through the improvement of relevant indicators to improve the issuer rating and bond rating;this can also help investors make rational investment decisions through investigating their situation of corporate governance.