CORPORATE GOVERNANCE AND CREDIT RATINGS

Corporate governance is a well-researched concept. The primary focus of the extant literature has been on the relationship of corporate governance with the cost of equity, firm's performance, capital structure and cost of debt. There is negligible research dedicated to its association with credit ratings. An entity with higher ratings is expected to have satisfactory corporate governance practices. The present study examines the impact of compliance of corporate governance provisions by Indian companies on their long-term credit ratings using the ordinal logit regression model. The results suggest that corporate governance is an important determinant of credit ratings. It also documents that the companies with favorable disclosure policies and practices are more likely to get higher ratings.