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Bonds governed under German law would normally not contain collective action clauses, ie provisions dealing with majority decisions by bondholders by which certain bond terms may be altered or waived. This is because it is uncertain whether, in the absence of a statutory basis, a decision taken by a majority of bondholders would be binding upon a dissenting minority. For certain circumstances, however, a statutory basis exists in the form of a law enacted in 1899 which, during the last decades, has been very rarely used. This paper discusses in what cases the law may be invoked, what decisions can be made by bondholders and what procedural requirements must be observed for getting to a binding and unchallengeable decision.

Real‐options have moved from being an academic theory to a decision‐making tool that is being used by managers. The thinking underpinning real options has remained true to its financial options‐pricing heritage, which means that it is based on an assumption of managerial risk‐neutrality. Managers can be risk‐seeking or risk‐averse, depending on whether or not they are meeting performance targets. This paper aims to explore the questions of what happens when the assumption of risk neutrality is relaxed and how the outcomes of managerial decisions on investments affect the firm's stockholders and bondholders.

The work is conceptual in its approach.

Managers, stockholders, or bondholders do not lose when managers are performing above target and when environmental uncertainty is high, or below target when environmental uncertainty is low, but managers win at the expense of stockholders when they are meeting performance targets and uncertainty is low, and managers win at the expense of bondholders when they are performing below target and uncertainty is high.

Propositions are provided for subsequent empirical testing. The paper holds environmental complexity and munificence constant, but discusses the implication of that in the conclusions.

The research has implications for shareholders and bondholders. It also has implications for Boards of Directors and the actions they take within their monitoring and control duties.

Because the paper is able to separate the constructs of uncertainty and risk, this is the first work that has been able to fully relax the assumption of risk neutrality that underpins real‐options theory.

The purpose of this paper is to examine the relationship between corporate governance (CG) and firms’ bond recovery rates (RRs). The authors hypothesize that governance features impact RRs by controlling agency costs that result from conflicts between bondholders and shareholders. The authors also test the relationship between CG and RRs during the last crisis.

The authors use a generalized method of moments regression model to test the relationship between CG and firms’ bond RRs. The authors employ a direct measure of recoveries rates from Moody’s ultimate recovery database covering the period from 2003 to 2012. Both firm-level CG and country-level variables are used to examine the determinants of corporate bonds RRs.

The results support a significant impact of CG mechanisms on bond RRs mainly during crisis period. The authors find that firms operating with CEO-Duality decrease their bond RRs during financial crisis. This implies wealth transfers from bondholders to shareholders and provides one explanation why some firms operate with weak governance.

This paper provides the first direct evidence that corporate bond RRs are directly related to CG mechanisms. The authors combine firm-level CG and country-level variables to examine the determinants of corporate bonds RRs. Earlier studies focussed on financial firm-level data and macro-economic variables. The authors also test the impact of board composition and ownership structure on bond recoveries.

The regularity of default by countries on their sovereign debt has led to the establishment of a number of evolving institutions or “Clubs”. These institutions' objective is to optimise the impact of imminent default or actual default on both international lending and borrowing. The purpose of this article is to discuss the informal institutions concerned with managing debt between national governments – the Paris Club, between governments and commercial banks – the London Club – and the currently ad hoc dealings with sovereign bonds.

The Clubs' changing approaches through the increasing depth and number of international financial crises from the Latin American debt crises of the 1980s, the Asian financial crisis of the late 1990s and the circumstances of the ex‐Soviet economies, plus the ongoing debt sub‐Saharan African debt crisis are discussed.

The shifts in the principles underlying the debt management system are manifest by the changing content of reschedulings, from simply deferring payments to actual reduction in their present value.

The functioning of principles of comparable treatment of all creditors are discussed with respect to the growing need for a body representing bondholders' interests.

The paper highlights the IMF's multiple and sometimes conflicting roles in the international financial system.

The purpose of this paper is to discuss and evaluate the sovereign default restructuring options in the European Monetary Union (EMU).

The paper examines financial policy options from a politico‐economic‐legal perspective. It relies primarily on secondary data analysis.

Sovereign default restructuring an unthinkable phenomenon in the hitherto affluent EMU could now be a possibility because of the lack of political cohesion and the realities of two‐speed European Union.

The paper relies extensively on secondary data. Future research through empirical multiple case studies would enrich the insights of this paper.

Insights from the paper would be of benefit to lawmakers, financial supervisors, financial institutions and investors in general.

The paper's main value lies in its use of multiple lenses to evaluate a serious financial issue in the EMU.

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the 2008 financial crisis.

To avoid macroeconomic problems and shocks and because of data availability, the authors select some countries of the Euro zone, namely, France, Belgium, Germany and Finland, during the 2004-2009 period. These countries share similar macroeconomic environments (unemployment, inflation and economic growth rates). All the data relating to the banks are manually drawn from the supervising reports submitted to banks and are available on the banks’ websites and/or on that of the AMF website. The banks included in our sample are drawn from the list of European central banks on www.ecb.int

The empirical results show that banks undertake tradeoffs between different governance mechanisms to alleviate the intensity of the agency conflicts between the shareholders and managers. The findings also confirm that internal mechanisms and capital regulations are complementary and significantly impact bank performance.

This analysis can be extended through studying the interaction between bondholders’ governance and shareholders’ governance and their impact on the 2008 financial crisis.

The changes in banking governance help banks find a useful and necessary way to avoid ill-considered risks that can cause a systemic risk. Therefore, some conditions should be met so that banking governance can contribute to the economic development.

Culture and mentality of good banking governance must grow as much as possible through awareness-raising, training, promotion, recognition of performance, enhancing procedure transparency and stability of good banking governance and regulations, strengthening the national capacity to fight against corruption, and preventive mechanisms.

This paper complements previous studies, mainly those of Andres and Vallelado (2008) who examine the impact of the components of the board on banking performance and of Laeven and Levine (2009) who estimate the combined effect of regulatory and ownership structure on the risk-taking of each bank.

Using a sample of listed Chinese companies that issued bonds from 2010 to 2019, the authors empirically test the link between CSR and corporate bond pricing, and the mechanism and channels behind this link.

This study systematically examines whether and how corporate social responsibility (CSR) affects the corporate bond market in China.

Firms with better CSR have higher corporate bond credit ratings and lower corporate bond yield spreads. These associations remain stable in robustness checks, including checks that use regional typhoon disaster as an instrumental variable. The effects of CSR are more significant for firms with a worse information environment and for those operating in high-risk environments. Better CSR is associated with less earnings management, fewer financial restatements and less analyst forecast divergence. In addition, the effects of CSR are more pronounced after the 2013 market-oriented reform and when issuers are non-state-owned enterprises.

Because market participants can incorporate firms' CSR into their decision-making, establishing an effective channel for communicating CSR between issuers and market participants will enhance the effects of CSR.

Researchers need to attend to the mechanisms behind the link between CSR and corporate bond pricing, and to the characteristics of strong environmental contingency in emerging markets, specifically the periods and scenarios in which the effects of CSR change.

This study provides systemic evidence that CSR benefits corporate bond pricing through both informational and reputational channels and that the effects of CSR vary by time and firm. These findings enrich the literatures on both the economic consequences of CSR and the determinants of corporate bond pricing, and provide a plausible explanation for mixed findings on the effects of CSR in previous studies.

This study investigates the effects of elements of corporate governance along with firm specific variables on the financial leverage of listed Indian firms in the context of agency conflicts and new governance laws.

A series of panel ordinary least squares as well as fixed/random effects regression models of book and market value of financial leverage on variables of corporate governance (board size, board composition, board meeting, board attendance and board gender) along with a set of control variables (asset tangibility, firm size, growth, liquidity and profitability) were estimated by employing 113 listed Indian firms during 2010–2021. Dynamic panel generalized method of moments models were also estimated to check the robustness of empirical results. Further, the full sample of firms was divided into small and large board sized companies using the median approach to investigate differences between small and large board characteristics on financial leverage.

The evidence predominantly suggested that the governance variables have significant impact on leverage ratios of selected firms. Governance variables such as board size, composition, attendance and gender are significantly found to be reducing the financial leverage of firms indicating that in general these attributes in a way, through monitoring managers, put pressure on them to pursue lower financial leverage. Board meeting is found to be positive and significantly related with financial leverage suggesting that the frequency of meetings signals its monitoring ability that may influence lenders' risk assessment lowering borrowing cost. The results on small and large board sized companies indicate that firms with small boards relatively issue more debt compared to firms with large boards suggesting that small boards adopt high debt policy.

The main policy implication of the study is that elements of internal corporate governance is a significant governance tool that has the potential to reduce agency conflict between the managers and agents through monitoring and decision making that has tangible effects on critical corporate decisions such as capital structure choices.

This paper contributes to the existing literature by bringing new evidence relating to agency conflicts and capital structure decisions in an emerging market like India post adoption of new regulations related to corporate governance specified in Clause 49 of Securities and Exchange Board of India and Companies Act, 2013 as there is significant dearth of such empirical work.

This paper aims to examine the relation between the cost of debt and the adoption of eXtensible Business Reporting Language (XBRL).

The financial data are obtained from the Compustat database. Regression analysis is used to examine the research hypotheses.

The authors find that both voluntary and mandatory adoption of XBRL lead to a lower cost of debt for firms, with weak evidence that this reduction is greater for the former than the latter.

The findings support the policy of the USA Securities and Exchange Commission (SEC), and thus this paper recommends that adoption of XBRL should be mandatory for all public firms.

The findings encourage top managers to develop their firms’ XBRL systems.

The results support the SEC’s policy of mandatory XBRL adoption, as it can lead to greater financial reporting transparency and mitigate information asymmetry between management and bondholders.

Based on 3,775 firm-year observations from 2009 to 2013 using publicly available disclosure data for Korean listed firms, this study examines whether and how firm-level governance characteristics are associated with investment in internal auditing proxied by compensation and the number of statutory internal auditors.

The authors investigate the association between governance characteristics and investment in internal auditing proxied by compensation and the number of statutory internal auditors.

The authors find that firms with greater ownership of the largest shareholders and with a higher proportion of outside directors invest more in internal auditing. These results indicate that firms with higher incentive and demand for monitoring are more likely to invest more in internal auditing. The authors further find that the positive effect of the largest shareholder ownership (board independence) on investment in internal auditing is attenuated in firms with greater board independence (ownership of the largest shareholders) suggesting that the complementary effect of the two governance mechanisms associated with internal auditing weakens as they function simultaneously.

The results provide regulators and investors with a clear picture of the governance characteristics of firms associated with investment in internal auditing. The results imply that both the largest shareholders and the outside board of directors play a significant role in resource allocation in internal auditing within a firm. The effect of allocation, however, can be attenuated contingent upon the combined characteristics of governance mechanisms.

Using large amounts of public archival data, this study adds to the extant literature on firm characteristics associated with investment in internal auditing. This study also contributes to the literature by expanding the scope of research on executive compensation to the locus of statutory internal auditors.