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

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Owusu, A., Kwabi, F., Owusu-Mensah, R. ORCID: 0000-0001-9748-9516 and Elamer, A., 2022. Lead independent director, managerial risk-taking and cost of debt: evidence from UK. Journal of International Accounting, Auditing and Taxation. ISSN 1061-9518 (Forthcoming)

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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 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 UK corporate governance code.

Item Type:

Journal article

Publication Title:

Journal of International Accounting, Auditing and Taxation

Creators:

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

Publisher:

Elsevier

Date:

3 November 2022

ISSN:

1061-9518