One of the most contentious issues in the corporate governance debate is the relationship between Corporate Governance (CG) and cost of debt. The study employed 2SLS regression model on a panel data collected from the 24 Asian countries over the period of 2006 to 2015. The cost of debt (COD) has been measured as the annual interest expense divided by the long term debt. The results depict that Quality of Corporate Governance (QCG) index has significant relationship in reducing cost of debt for firms in Asian countries. Moreover, the control variables like; leverage, firm size and share price volatility are also found significantly related with cost of debt for Asian firms. The results also indicate that explicit corporate governance variables like; board independence, audit committee independence, ownership concentration and CEO duality have also significant association with firm’s cost of debt in Asian countries which is in accordance with the agency theory.
Corporate Governance, cost of debt, endogeneity, Asian Countries