Investment in Internal Accounting Control Personnel and Corporate Bond Yield Spreads: Evidence from South Korea

Internal accounting control personnel constitute the operational foundation through which firms ensure the accuracy and reliability of financial reporting, yet their relevance to capital market outcomes remains insufficiently documented. This study evaluates whether investment in internal accounting control personnel is incorporated into corporate bond pricing by considering both the quantitative dimension of staffing levels and the qualitative dimension of personnel expertise. Corporate bond issuance data are merged with mandatory disclosures on internal accounting control personnel for manufacturing firms listed on the Korea Exchange between 2011 and 2021. The analysis shows a significantly negative association between internal accounting control personnel and corporate bond yield spreads, with personnel expertise further reinforcing this relationship. These patterns are consistent with the view that enhanced monitoring capacity and stronger reporting credibility reduce information asymmetry and perceived default risk among bond investors. The evidence positions internal accounting control personnel as an operational and signaling indicator of internal control effectiveness reflected in debt market pricing and suggests that investment in internal control staff extends beyond compliance to produce measurable financial benefits through lower borrowing costs.