Corporate Structure Complexity and Cost of Debt

[...]it is harder for lenders to recoup the assets, thus the recovery risk is higher. [...]lenders will charge them higher costs of debt to account for such risk. [...]while our main hypothesis is that the cost of debt is positively associated with corporate structure complexity, the relationship between corporate structure complexity and cost of debt needs empirical inquiry. [...]we employ audit fees as well as the number of vice presidents as instrumental variables for two-stage-least-squares (2SLS) analyses. The literature has examined a wide range of factors including taxes (Graham and Tucker, 2006), corporate social performance (Magnanelli and Izzo, 2017), analyst forecast characteristics (Mansi et al., 2011), adverse selection (Myers and Majluf, 1984), investment opportunities (Houston and James, 1996), innovation (Mann, 2018), legal structure (Sikochi, 2020), ownership structure (Sanchez-Ballesta and Garcia-Meca, 2011), board characteristics (Anderson et al., 2004), and size (Graham et al., 2008).