Premium
Effects of anti‐takeover provisions on the corporate cost of debt: evidence from China
Author(s) -
Feng Yumei,
Huang Haozhi,
Wang Congcong,
Xie Qian
Publication year - 2021
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12728
Subject(s) - agency cost , endogeneity , monetary economics , business , debt , robustness (evolution) , accounting , accrual , china , sample (material) , cost of capital , agency (philosophy) , finance , economics , incentive , corporate governance , econometrics , microeconomics , earnings , biochemistry , chemistry , philosophy , chromatography , epistemology , gene , political science , law , shareholder
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.