Description:
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<jats:title content-type="abstract-subheading">Purpose</jats:title>
<jats:p>This study aims to examine the impact of board characteristics on debt choice.</jats:p>
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<jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title>
<jats:p>The sample comprises of unique nonfinancial firms listed in the FTSE 350 over the period 2011–2018. This study uses Tobit and OLS regressions to check the impact of board characteristics on debt choice. The results are robust to the battery of robust checks.</jats:p>
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<jats:title content-type="abstract-subheading">Findings</jats:title>
<jats:p>This study finds that board size and board independence are positively associated with public debt. However, CEO duality and board meetings frequency are inversely associated with public debt. Overall, the findings are consistent with the “financial intermediation theory” that the firms with weak governance rely on bank financing, and firms with better corporate governance go for public debt.</jats:p>
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<jats:title content-type="abstract-subheading">Research limitations/implications</jats:title>
<jats:p>This study offers significant insights for investors and policymakers.</jats:p>
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<jats:title content-type="abstract-subheading">Originality/value</jats:title>
<jats:p>This study offers new insights regarding the role of board characteristics in firms’ debt choice by showing the significant impact of board characteristics on debt choice. The findings indicate that the board’s efficient internal monitoring may substitute external monitoring by the bank.</jats:p>
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