Executives with business education background and cost of debt financing: Evidence from China

We have examined the impact of executives possessing a business education background on the cost of debt financing. Our findings reveal that executives with such background significantly elevate the cost of debt financing, and the conclusion remains consistent after a series of robustness tests. Moreover, we observe this impact is particularly pronounced among chairmen of non-state-owned enterprises, and is more substantial in environments characterized by weaker internal and external regulatory frameworks. In the examination of underlying mechanisms, we identify that executives with a business education background contribute to an increased cost of debt financing by escalating financial risk, information asymmetry, and agency costs. This paper furnishes empirical evidence that enhances our comprehensive understanding of the cost of debt financing and its determinants.