Corporate Governance and Leverage: Evidence from a Natural Experiment

Stefan Arping and Zacharias Sautner
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Zacharias Sautner: University of Amsterdam

No 10-019/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This discussion paper led to a publication in Finance Research Letters , 2010, 7(2), 127-34.

We argue that the recent corporate governance reform in the Netherlands provides a natural experiment to explore the impact of changes in corporate governance on financing policy. We find that, relative to a control sample of comparable firms outside the Netherlands, Dutch firms significantly reduced their leverage following the passage of the reform. Our findings are consistent with the view that corporate governance improvements reduce the value of debt as a disciplining device.

Keywords: Corporate Governance; Corporate Leverage; Financing Policy (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2010-02-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Corporate governance and leverage: Evidence from a natural experiment (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20100019

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