This study aims to examine the relationship between an ex-auditor CEO and the cost of debt (COD) of the company.
This study analyses 1,659 data samples of public companies listed on the Indonesia Stock Exchange from 2010 to 2019, using ordinary least squares (OLS) analysis to derive its main findings.
The main results indicate that an ex-auditor CEO has a negative relationship with the COD. This finding remains robust when applying coarsened exact matching (CEM) and Heckman’s two-stage regression methods. Additional analysis reveals that CEOs from Big Four and Big Ten public accounting firms significantly reduce the COD. Furthermore, the authors observe that a female ex-auditor CEO tends to incur a higher COD compared to her male counterpart.
This research offers practical recommendations for companies when selecting CEOs based on their backgrounds. The findings can significantly influence corporate strategy, especially regarding capital structure, as CEO profiles play a vital role in shaping financial decisions and boosting lender confidence.
This groundbreaking study decisively examines the connection between ex-auditor CEOs and the COD, delivering critical insights that enhance our understanding of corporate governance practices.
