Effects of anti‐takeover provisions on the corporate cost of debt: evidence from China

Abstract

Using a sample of Chinese listed companies, we investigate the impact of anti‐takeover provisions (ATPs) on the cost of debt. The results show that ATPs increase the cost of debt, which is contrary to findings based on US data. Moreover, executive ownership enhances the positive relationship, while hiring a reputable auditor attenuates it, indicating an agency channel. We further examine the relation between agency costs and ATPs and confirm that ATPs aggravate agency costs, leading to detrimental effects for debt borrowers. Our findings are robust to controlling for potential endogeneity issues and other robustness checks.

The Impact of Integrated Reporting on the Cost of Capital: Evidence from an Emerging Market

“…As for the control variables, the price-to-book ratio has a significant negative impact on COD. This suggests that firms with high growth potential may enjoy lower levels of borrowing costs because they are welcomed by creditors (Feng et al 2021). Total debt is significantly related to WACC and COD.…”

Being private, Big 4 auditors, and debt raising

“…While some prior studies (Fortin & Pittman, 2007) measure the cost of debt as the spread between corporate bond yield and a benchmark rate (US treasury yield or London interbank offered rate), the corporate bond market is not accessible for most private firms in the UK. We follow the extant literature (Cano‐Rodríguez et al ., 2016; Feng et al ., 2021; Gul et al ., 2013; Pittman & Fortin, 2004) to measure Cost of debt as a firm's interest expense for the year divided by the average of short‐term and long‐term debt during the year.…”