CEO tenure and cost of debt

Andrews Owusu, Frank Kwabi, Ernest Ezeani, Ruth Owusu-Mensah

Research output: Contribution to journalArticlepeer-review

16 Citations (Scopus)


In this study, we investigate the relationship between CEO tenure and cost of debt. Using a sample of the FTSE All-Share Index firms listed on the London Stock Exchange for the period 2009 to 2018 and the ordinary least squares regression (OLS) estimation method, we find that cost of debt is higher for firms with CEOs in their early tenure in office than those in their later tenure in office. Further analysis shows that board independence attributes including (1) the proportion of independent directors on the board, (2) full (100%) independent audit committee members, and (3) a lead independent director representation on the board interact with CEO early tenure in office to reduce cost of debt due to the board’s effective monitoring ability when the CEO is new and risk-seeking. Our study extends CEO tenure and corporate outcomes in general and in particular CEO risk-taking incentives and cost of debt literature, and has important implications for firms seeking to raise finance from the debt market when their CEO is new as well as identifying the control mechanisms that they need to put in place to lower the cost of debt.

Original languageEnglish
Pages (from-to)507-544
Number of pages38
JournalReview of Quantitative Finance and Accounting
Issue number2
Early online date21 Jun 2022
Publication statusPublished - Aug 2022

Bibliographical note

Publisher Copyright:
© 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.


  • Board independence
  • CEO tenure
  • Cost of debt

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)
  • Finance


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