Nonlinear impacts of board independence on debt financing: Contingent on the shareholdings of the largest shareholder

dc.contributor.author Kweh, Qian Long
dc.contributor.author Ting, Irene Wei Kiong
dc.contributor.author Le, Hanh Thi My
dc.contributor.author Nourani, Mohammad
dc.date.accessioned 2020-08-26T08:36:27Z
dc.date.available 2020-08-26T08:36:27Z
dc.date.copyright © 2020
dc.date.issued 2021-04
dc.description This article is not available at CUD collection. The version of scholarly record of this article paper is published in International Journal of Finance & Economics (2021), available online at: https://doi.org/10.1002/ijfe.1907 en_US
dc.description.abstract Shareholder interest is unprotected until and unless precise financial decision making is in place. Although literature supports the independent directors' monitoring function in a decision-making process, for a controversial debt financing issue, the influence of the largest shareholders may hinder such an action. This study aims to delineate the association between board independence and debt financing when the largest shareholders are likely to play a significant role between them. With a sample of Vietnamese listed companies from 2007 to 2016, our regression analyses show that a nonlinear U-shaped relationship between level of board independence and debt financing is stronger among the largest shareholders with a high level of shareholdings in their shareholding group than the full sample. This finding implies the determining influence of the largest shareholders with a high level of shareholdings in a company. However, this association is not found in companies with a low level of shareholdings by the largest shareholders. Results reveal that the largest shareholders have the incentive to influence the decision making of independent directors about debt financing when their shareholdings are high. Specifically, issuing more debt to raise capital for business reduces the risk of the largest shareholders losing their controlling rights. The results are further supported by several robustness checks and controlling for economic events such as the global financial crisis and ASEAN Economic Community. © 2020 John Wiley & Sons, Ltd. en_US
dc.description.sponsorship Foundation of Science and Technology Development of Ton Duc Thang University en_US
dc.identifier.citation Kweh, Q. L., Ting, I. W. K., Le, H. T. M., & Nourani, M. (2021). Nonlinear impacts of board independence on debt financing: Contingent on the shareholdings of the largest shareholder. International Journal of Finance & Economics, 26(2), 2289-2306. https://doi.org/10.1002/ijfe.1907 en_US
dc.identifier.issn 10769307
dc.identifier.uri https://doi.org/10.1002/ijfe.1907
dc.identifier.uri http://hdl.handle.net/20.500.12519/232
dc.language.iso en en_US
dc.publisher John Wiley and Sons Ltd en_US
dc.relation Authors Affiliations : Kweh, Q.L., Faculty of Management, Canadian University Dubai, Dubai, United Arab Emirates; Ting, I.W.K., Faculty of Industrial Management, Universiti Malaysia Pahang, Gambang, Malaysia; Le, H.T.M., Benchmarking Research Group, Faculty of Accounting, Ton Duc Thang University, Ho Chi Minh City, Viet Nam; Nourani, M., School of Management, Universiti Sains Malaysia, Penang, Malaysia
dc.relation.ispartofseries International Journal of Finance & Economics;
dc.rights License to reuse the abstract has been secured from John Wiley and Sons and Copyright Clearance Center.
dc.rights.holder Copyright © 2020 John Wiley & Sons, Ltd.
dc.rights.uri https://s100.copyright.com/CustomerAdmin/PLF.jsp?ref=545c6dcc-ee7b-40c6-a4c2-4222260d7108
dc.subject Audit Committee en_US
dc.subject Corporate Governance en_US
dc.subject Board Independence en_US
dc.subject board independence en_US
dc.subject debt financing en_US
dc.subject largest shareholders en_US
dc.subject nonlinearity en_US
dc.subject Vietnam en_US
dc.title Nonlinear impacts of board independence on debt financing: Contingent on the shareholdings of the largest shareholder en_US
dc.type Article en_US
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