The impact of corporate governance on default risk: BERTopic literature review

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Abstract

This study utilizes the BERTopic methodology, a topic modelling tool that facilitates a meticulous exploration of existing literature, to comprehensively review the interplay between corporate governance and default risk. Through analysis of diverse empirical studies, it delves into understanding how corporate governance practices influence default probability. The study underscores the importance of effective governance mechanisms — board attributes, ownership structures, executive compensation, shareholder rights, and disclosure practices — in molding default probabilities. It also highlights the role of external governance mechanisms and regulatory frameworks in managing default risk. Notably, this research advocates for further investigation into emerging governance models and their integration with modern machine-learning techniques to amplify their impact.

Keywords: Corporate Governance, Default, Bankruptcy, Corporate Distress, Topic Modelling

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G17, G32, G33, G34, K33

Received: 25.07.2023
Accepted: 23.10.2023
Published online: 25.10.2023

How to cite this paper: Colantoni, F. (2023). The impact of corporate governance on default risk: BERTopic literature review. Corporate Ownership & Control, 20(4), 57–71. https://doi.org/10.22495/cocv20i4art4