Corporate Governance and Cost of Debt: Evidence from Russia

This study investigates the impact of corporate governance attributes in terms of board characteristics and ownership structure on the cost of debt for Russian companies. Using a sample of 427 bond issues during 2006-2015, I found that number of independent directors and presence of key committees at the board do not influence the cost of debt, while ownership structure parameters significantly affect the cost of debt on the Russian market. Thus, it was revealed that higher ownership concentration leads to a decrease of yield spreads. At the same time increase of government and management ownership is associated with higher yield spreads. These results were checked to be robust, using alternative dependent variable construction and various model specifications. The evidence may shed the light on the perception of corporate governance attributes by investors in Russia.