Abstract:

This study aims to investigate the effect of corporate governance on the cost of debt of nonfinancial firms in the ASEAN-5 using panel data regression. This study classifies result into three groups namely, based on the corporate governance categories, the country law system, and the structure of the company board. The result of this study finds that there is significant effect of corporate governance on the cost of debt in ASEAN-5 in poor category firms. Corporate governance also has a negative and significant effect on both the one-tier and two-tier board structure. Each corporate governance sub-indices, also has a significance effect on 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 cost of debt by debtholders in ASEAN-5 countries. This study contributes in a sense about the impact of corporate governance and each of the subindices on the cost of debt in ASEAN-5 countries.