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Effects of anti‐takeover provisions on the corporate cost of debt: evidence from China

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  • Yumei Feng
  • Haozhi Huang
  • Congcong Wang
  • Qian Xie

Abstract

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.

Suggested Citation

  • Yumei Feng & Haozhi Huang & Congcong Wang & Qian Xie, 2021. "Effects of anti‐takeover provisions on the corporate cost of debt: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4119-4145, September.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:3:p:4119-4145
    DOI: 10.1111/acfi.12728
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