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

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  • Suja Sekhar C

    (Indian Institute of Management Kozhikode)

  • Jijo Lukose PJ

    (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.

Suggested Citation

  • Suja Sekhar C & Jijo Lukose PJ, 2022. "Banker on Board and the Debt-Equity Choice - Evidence from India," Working papers 515, Indian Institute of Management Kozhikode.
    • Handle: RePEc:iik:wpaper:515
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