Judicial efficiency, debt structure, and cost of debt

In the framework of law and finance literature, this study investigates the link between judicial efficiency and financial debt cost in 1487 non‐financial firms across the euro zone from 2010 to 2021. Utilizing qualitative (rule of law) and quantitative (judicial proceeding length) indicators from t...

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Bibliographic Details
Published in:Managerial and decision economics 2024-09, Vol.45 (6), p.3541-3563
Main Authors: Aguiar‐Díaz, Inmaculada, Mruk, Ewelina Monica, Ruiz‐Mallorquí, María Victoria
Format: Article
Language:English
Subjects:
Corporate bonds
Debt
Governance
Rule of law
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Summary:In the framework of law and finance literature, this study investigates the link between judicial efficiency and financial debt cost in 1487 non‐financial firms across the euro zone from 2010 to 2021. Utilizing qualitative (rule of law) and quantitative (judicial proceeding length) indicators from the Worldwide Governance Indicators and Doing Business databases, our findings support the hypothesis that efficient justice lowers financial debt cost. Additionally, we observe a moderating effect of debt structure, specifically that private non‐bank debt enhances the reduction impact of judicial efficiency on debt cost, unlike bank and corporate bonds debt.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.4207