How Do Board Reforms Affect Debt Financing Costs Around the World?

Hui Chiu ZHAO, Chen LIN, Lai WEI*

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review


In this study, we examine the effect of worldwide board reforms on the cost of debt financing. We document an increase of loan spread after a country initiates the reform. The increase is larger among firms that are more exposed to shareholder-debtholder conflicts. The results suggest that board reforms empower shareholders at the cost of debtholders. However, we also find that, while the reform component related to board independence leads to the increase in the cost of debt, the component related to audit committee independence helps decrease the cost.
Original languageEnglish
JournalJournal of Financial and Quantitative Analysis
Early online date12 Aug 2022
Publication statusE-pub ahead of print - 12 Aug 2022

Bibliographical note

The work described in this paper was partially supported by a grant from the Research Grant Council of the Hong Kong Special Administrative Region, China (Project No. T35/710/20R). Zhao would like to thank the financial support from the China National Social Science Youth Fund Project (Nos. 19CJL048).

© The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington


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