Board Structure, Corporate Governance, and Cost of Debt In ASEAN-5

This study aims to investigate the effect of corporate governance on the cost of debt of non-financial firms in the ASEAN-5 countries, namely Indonesia, Malaysia, Singapore, Thailand, and the Philippines, by using panel data regression. This study uses ASEAN Corporate Governance Scorecard to measure Corporate Governance. This study also classifies result into three groups based on the corporate governance categories, the country law system, and the structure of the company’s board. The result shows that there is a significant effect of corporate governance on the cost of debt in ASEAN-5 in weak corporate governance firms. Corporate governance also has a negative and significant impact on both the one-tier and two-tier board structure.On the other hand, based on the country law system, both common and civil law system positively affect the cost of debt. This result implies that corporate governance is not the main factor that affects the cost of debt. Each corporate governance sub-indices, which are shareholder rights, the role of stakeholders, and disclosure & transparency, also affects the cost of debt in ASEAN-5. Likewise, other factors, such as firm age, size, performance, and inflation rate, are also considered as important factors that affect the cost of debt by debtholders in ASEAN-5 countries.