Friendly Boards and the Cost of Debt

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

Comments for author File: Comments.pdf

Author Response

Please see the attachment.

Author Response File: Author Response.docx

Reviewer 2 Report

Comments and Suggestions for Authors

Abstract

The purpose has been described.  Add 23 sentences to describe the design, data collection, methodology, analysis, and software used. Add 23 sentences of Conclusions.

Introduction

Paragraph 1. Describe agency theory and how it affects the cost of debt. Describe Jensen and Meckling's (1976) seminal paper describing agency theory. 

Paragraph 2. Lines 31-34 describe directors' duties. Add 3 sentences explaining each of these duties. Lines 79-87 describe the entrenching of CEOs. Add 4-5 sentences on how entrenchment affects creditors' interests. 

Page 2. Expand the last paragraph, with 3-4 sentences on the hypotheses tested. 

Section 2 should be a Literature Review. Include background information on agency theory, CEO friendly boards, creditor-wealth enhancing hypothesis.

Section 3. The hypotheses development is too brief. This is the weakest part of the paper. Arguments of information asymmetry and contractual incompleteness supporting hypothesis 1 must be explained in a full paragraph. Likewise for the creditor wealth enhancing hypothesis. Add 2 paragraphs relating CEO friendly boards and yield spreads. 

Include a table describing the variables used.

Divide Conclusions into Theoretical Implications, Practical Implications, and 34 Research Limitations. 

 

Comments on the Quality of English Language

Moderate editing required.

Author Response

Please see the attachment.

Author Response File: Author Response.docx

Round 2

Reviewer 2 Report

Comments and Suggestions for Authors

Accept. Changes have been made.

Comments on the Quality of English Language

Moderate editing required.