A series of defaults, a distinctive corporate environment and inconclusive findings in literature make Australia an interesting case in which to investigate the association between corporate governance and default risk. Using a large panel of 1086 non-financial firms from 2001 to 2013, we find that better governed firms are strongly associated with a lower level of default risk, and that the association is stronger among firms with more growth opportunities. Moreover, empirical evidence supports the role of stock liquidity as a channel of the relationship. Overall these findings have practical implications for the stakeholders in Australia.