CHAPTER 3:

THE CAPITAL STRUCTURE –

CORPORATE GOVERNANCE
RELATIONSHIP
SITI NUR ALIA BINTI MOHAMAD (BF0101561)
N O O R S A F FA S YA H D A H B I N T I S H A R I F F U D D I N
(BF0101689)
S H AT I S H ( B F 0 9 9 0 9 3 )
ALEX
ISSUES RELATED TO JOURNAL 1:
Ethico-economic Analysis Of Impact Finance: The Case Of Green Bonds

MAIN ISSUES
1) Funding an environment or ‘green’ project – There are numerous advantage for investors –
they will know the precise project in which their funds are invested.
2)According to Novethic: Green Bonds are too small – issued by Chinese market – taxation can
pose problems for investor
3)Whether the identified project – perceived as sustainable or green, and whether the funds
allocated to this project are clearly traced and visible to investor.
4)Responsible equity investments, green investors in the bond market – investor are not always
prepared to pay more for a project that could have been funded with a conventional bond.
ISSUES RELATED TO JOURNAL 2:
Th e R o le O f I n s ti tu ti o n I n v e s to r s I n M it ig a ti ng T h e D ef a u lt Ri s k O f S u k u k
A n d C o nv e n t io n a l B o n d s

MAIN ISSUES:
1)Monitoring role and voting rights decisions – The company have a relationship towards sukuk
issuances in mitigating the default risks but not conventional risk.
2)Sukuk issuance doesn’t have any significant relationship – elements that involved riba for
instance, volatility effect and inflation rate proxy by CPI.
3)Both types of issuances give a good signal of the firm’s sustainability of growth.
4)Specific technique and method to recognize and measure transaction relate issuances and
investment are compliant with shariah law.
ISSUES RELATED TO JOURNAL 3:
I n sti tu ti o na l O w n e r s h ip , B o a r d o f D i r e c to r s a n d Yie ld Sp r ea ds in Lo n g a n d
Me d iu m - te r m Co r p o r a te Bo n d s a n d Su k u k

MAIN ISSUES:
1) The presence of top six institutional investors and characteristics of BOD exert a significant
negative effect on the yield spreads
2) Relationship between agent and principal in the separation and control lead to agency
conflict
3) Institutional investors and the BOD are beneficial to bondholder – help to reduce the cost of
debt and mitigating the default risk.
4) Issuer firm with the effective BOD characteristics can reduce default risk – important to
influence corporate bond markets.
THANK
YOU