Do Family Firms’ Specific Governance Mechanisms Moderate the Cost of Debt?

Antonio Duréndez; Antonia Madrid‐Guijarro; Ginés Hernández‐Cánovas

doi:10.1111/auar.12217

Do Family Firms’ Specific Governance Mechanisms Moderate the Cost of Debt?

Australian Accounting Review ◽

10.1111/auar.12217 ◽

2018 ◽

Vol 29 (1) ◽

pp. 49-63 ◽

Cited By ~ 2

Author(s):

Antonio Duréndez ◽

Antonia Madrid‐Guijarro ◽

Ginés Hernández‐Cánovas

Keyword(s):

Family Firms ◽

Cost Of Debt ◽

Governance Mechanisms ◽

The Cost

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Corporate governance mechanisms and cost of debt

Managerial Auditing Journal ◽

10.1108/maj-12-2014-1139 ◽

2016 ◽

Vol 31 (3) ◽

pp. 314-336 ◽

Cited By ~ 12

Author(s):

Hafiza Aishah Hashim ◽

Muneer Amrah

Keyword(s):

Board Of Directors ◽

Audit Committee ◽

Family Firms ◽

Cost Of Debt ◽

Composite Measure ◽

Sultanate Of Oman ◽

Full Sample ◽

Content Type ◽

The Board Of Directors ◽

The Cost

Purpose – The purpose of this study is to determine whether there is any difference in the association among the board of directors, audit committee effectiveness and the cost of debt between the family- and non-family-owned companies in the Sultanate of Oman. Design/methodology/approach – This study uses a panel data set that has multiple observations on the same economic units. Each element has two subscripts: the group identifier, i (68 companies listed on the Muscat Securities Market), and within the group index denoted by t, which identifies time (2005-2011). The regression model of this study is based on the random effects model, which, according to the Hausman and Breusch-Pagan (LM) (Breusch and Pagan, 1980) tests, is an appropriate model. Findings – This study finds that the association between a board of directors’ effectiveness and cost of debt is negative and significant for the full sample and non-family firms. This relationship, however, is weak and not significant for family firms. Additionally, this study indicates that audit committee effectiveness has a significant effect on the cost of debt based on the full sample and family firms, but is not significant for non-family firms. Originality/value – This study examines firms in the Sultanate of Oman, where family ownership control is common. Based on a framework conceptualized according to the agency theory, using data from Oman enables a comparison between family and non-family firms with respect to the effect of the board of directors’ and audit committee’s characteristics as a composite measure. This composite measure captures their combined effect on the propensity of the cost of debt.

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How do Corporate Governance Decisions Affect Bondholders?

Quarterly Journal of Finance ◽

10.1142/s2010139216500117 ◽

2016 ◽

Vol 06 (03) ◽

pp. 1650011 ◽

Cited By ~ 4

Author(s):

Hong Li ◽

Yuan Wang

Keyword(s):

Corporate Governance ◽

Information Asymmetry ◽

Agency Costs ◽

Negative Relationship ◽

Selection Effect ◽

The Self ◽

Cost Of Debt ◽

Governance Mechanisms ◽

Self Selection ◽

The Cost

Existing studies have documented a negative relationship between the GIM corporate governance index (which contains anti-takeover provisions) and the corporate cost of debt, which implies that fewer anti-takeover provisions may lead to a larger shareholder expropriation of bondholder wealth. That is, strong corporate governance hurts bondholders (asset substitution hypothesis). However, another stream of research asserts that governance mechanisms may benefit bondholders by paring down agency costs and decreasing information asymmetry between the firm and the lenders (monitoring hypothesis). We reexamine this issue by considering the self-selection effect. We find that both hypotheses can be true, and that firms consider the reduction of cost of debt when self-selecting their governance, and the cost of debt would have been much higher had the alternative governance decision been made.

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Corporate Governance And Cost Of Debt: Review Of Recent Studies

Journal of Corporate Finance Research / Корпоративные Финансы | ISSN 2073-0438 ◽

10.17323/j.jcfr.2073-0438.8.2.2014.91-105 ◽

2014 ◽

Vol 8 (2) ◽

pp. 91-105

Author(s):

Anastasia Stepanova ◽

Ilya Rabotinskiy

Keyword(s):

Corporate Governance ◽

Emerging Markets ◽

Research University ◽

Cost Of Debt ◽

Agency Conflicts ◽

Governance Mechanisms ◽

Corporate Governance Mechanisms ◽

The Cost ◽

The Relationship ◽

Level Of Risk

Авторы: Анастасия Николаевна Степанова НИУ ВШЭ, [email protected] Илья Работинский НИУ ВШЭ The study was supported with the grant of Faculty of Economics of the National Research University Higher School of Economics in 2013.We suppose that the agency conflicts between shareholders and bondholders may affect the level of risk of company's debt instruments, therefore, increasing the cost of debt of the firm. A number of corporate governance mechanisms are developed to alleviate the conflicts. This paper surveys research on the relationship between corporate governance and the cost of debt. We pay special attention to the empirical papers with specific findings on cost of debt's nonfinancial determinants in emerging markets.

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