Lead independent director, managerial risk-taking, and cost of debt: Evidence from UK

Owusu A., Kwabi F., Owusu-Mensah R., Elamer A.

Journal of International Accounting, Auditing and Taxation, vol.53, 2023 (ESCI, Scopus) identifier

  • Nəşrin Növü: Article / Article
  • Cild: 53
  • Nəşr tarixi: 2023
  • Doi nömrəsi: 10.1016/j.intaccaudtax.2023.100576
  • jurnalın adı: Journal of International Accounting, Auditing and Taxation
  • Jurnalın baxıldığı indekslər: Emerging Sources Citation Index (ESCI), Scopus, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, DIALNET
  • Açar sözlər: Cost of debt, Lead independent director, Managerial risk-taking
  • Açıq Arxiv Kolleksiyası: Məqalə
  • Adres: Bəli

Qısa məlumat

We extend the existing literature on how the adoption of a lead independent director is related to corporate outcomes by documenting that the presence of a lead independent director on the board is significantly and negatively related to managerial risk-taking. The result is more pronounced for firms with a non-independent board chair. In a further analysis, we document that decreased managerial risk-taking leads to a reduction in the cost of debt for firms with a lead independent director on the board. Overall, our results suggest that the adoption of a lead independent director is an effective governance mechanism when the board chair is not independent, which supports the motivation of the United Kingdom corporate governance code.