Banker on Board and the Debt-Equity Choice - Evidence from India

Suja Sekhar C () and Jijo Lukose PJ ()
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Suja Sekhar C: Indian Institute of Management Kozhikode
Jijo Lukose PJ: Indian Institute of Management Kozhikode

No 515, Working papers from Indian Institute of Management Kozhikode

Abstract: : We study the effect of bank nominee director on listed Indian firms' debt-equity choice and indirectly examine the trade-off, pecking order, and market timing theories. Consistent with the monitoring effect, our findings indicate that the presence of a bank nominee on a board of directors favours equity over debt. Contrary to expectations, the nominee's presence does not appear to favour high leverage. Additionally, having a banker on board promotes credit availability during periods of constrained external funding. as the incumbent owner is averse to allowing control dilution.

Pages: 03 pages
Date: 2022-03
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