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

Journal article

Owusu, A., Kwabi, F., Owusu-Mensah, R. and Elamer, A. A. 2023. Lead independent director, managerial risk-taking, and cost of debt: Evidence from UK. Journal of International Accounting, Auditing and Taxation. 52, pp. 1-13. https://doi.org/10.1016/j.intaccaudtax.2023.100576
AuthorsOwusu, A., Kwabi, F., Owusu-Mensah, R. and Elamer, A. A.
Abstract

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.

Keywordslead independent director; managerial risk-taking; cost of debt
Year2023
JournalJournal of International Accounting, Auditing and Taxation
Journal citation52, pp. 1-13
PublisherElsevier Ltd.
ISSN1879-1603
Digital Object Identifier (DOI)https://doi.org/10.1016/j.intaccaudtax.2023.100576
Web address (URL)https://www.sciencedirect.com/science/article/pii/S1061951823000551?via%3Dihub
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Open
Publisher's version
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File Access Level
Open
Output statusPublished
Publication dates
Online19 Sep 2023
Publication process dates
Accepted16 Oct 2023
Deposited03 Oct 2023
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