Generalist CEOs and the Cost of Debt: Evidence from Indonesia

Novrys Suhardianto; Sri Ningsih; Sahrian Aditya  Rahmatulloh; Mohammad  Nasih; Oudyza Oktavia Putri; Zayyan Ahmad Nuryaddin

doi:10.22146/gamaijb.v28i1.15484

Novrys Suhardianto Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia
Sri Ningsih Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia
Sahrian Aditya Rahmatulloh Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia
Mohammad Nasih Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia
Oudyza Oktavia Putri Department of Accounting, Faculty of Economic and Business, Universitas Airlangga, Surabaya, Indonesia
Zayyan Ahmad Nuryaddin Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga

DOI: https://doi.org/10.22146/gamaijb.v28i1.15484

Keywords: Generalist CEOs, Cost of debt, Corporate governance, Industry experience

Abstract

This study examines the impact of generalist CEOs on the cost of debt in Indonesia, using data from public companies listed on the Indonesia Stock Exchange (IDX) between 2015 and 2021. Employing panel data regression with a random effects model, Coarsened Exact Matching (CEM), and Heckman's two-stage regression, the results indicate that companies with generalist CEOs incur higher debt costs. Additional analyses confirm that specialist CEOs are associated with lower debt costs, reinforcing the main findings. These results highlight how generalist CEOs, with their broad industry experience, may increase perceived financial risk, leading creditors to impose higher interest rates. From a practical perspective, these findings provide valuable insights for investors, corporate boards, and policymakers in aligning CEO selection processes with firm-specific financial objectives to mitigate risks. From a social perspective, the findings underscore the importance of addressing financial risks associated with generalist CEOs, particularly in Indonesia, where high information asymmetry and inefficient capital markets persist. Elevated borrowing costs could hinder corporate investments and broader economic growth. By integrating these findings into governance practices, this study contributes to sustainable development and financial stability in emerging markets.

Author Biographies

Novrys Suhardianto, Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia

Suhardianto, Novrys holds the position of Lecturer at the Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga, and is a member of the Center for Politics, Economics, and Business Research (CPEBR). He earned his Bachelor’s degree in Economics from Universitas Airlangga in 2005, his Master of Science in Accounting from Universitas Brawijaya in 2011, and his Doctoral degree from City University of Hong Kong in 2019. His research interests include corporate governance, auditing, and sustainability reporting. He has published in Cogent Business & Management.
Author’s contact detail: Address: -; phone number: -; Email: novrys@feb.unair.ac.id

Sri Ningsih, Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia

Ningsih, Sri holds the position of Lecturer at the Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga, and is a member of the Center for Politics, Economics, and Business Research (CPEBR). She earned her Bachelor’s and Master’s degrees in Accounting from Universitas Gadjah Mada, and her Doctoral degree from Universitas Airlangga. Her research interests include public sector accounting and sustainability. She has published in Corporate Social Responsibility and Environmental Management and Pacific Accounting Review.
Author’s contact detail: Address: -; phone number: -; Email: sri.ningsih@feb.unair. ac.id

Sahrian Aditya Rahmatulloh, Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia

Rahmatulloh, Sahrian Aditya is a Master’s student and Research Assistant at the Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga. He earned both his Bachelor’s and Master’s degrees in Accounting from Universitas Airlangga. His research focuses on executive characteristics and sustainability accounting. He has published in Corporate Social Responsibility and Environmental Management and Pacific Accounting Review.
Author’s contact detail: Address: -; phone number: -; Email: sahrian.aditya.rahmatulloh-2023@feb.unair.ac.id

Mohammad Nasih, Department of Accounting, Faculty of Economic and Business and Center for Environmental, Social, and Governance Studies (CESGS), Universitas Airlangga, Surabaya, Indonesia

Nasih, Mohammad holds the position of Professor of Accounting at the Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga, and is a member of the Center for Environmental, Social, and Governance Studies (CESGS). He earned his Bachelor’s degree from Universitas Airlangga, his Master’s degree from Institut Teknologi Bandung, and his Doctoral degree from Universitas Airlangga. His research interests include financial reporting and corporate governance. He has published in Corporate Governance: The International Journal of Business in Society, International Journal of Accounting & Information Management, and Research in International Business and Finance.
Author’s contact detail: Address: -; phone number: -; Email: mohnasih@feb.unair.ac.id

Oudyza Oktavia Putri, Department of Accounting, Faculty of Economic and Business, Universitas Airlangga, Surabaya, Indonesia

Putri, Oudyza Oktavia is an undergraduate student at the Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga, where she is pursuing her Bachelor’s degree in Accounting. Her research interests include financial accounting.
Author’s contact detail: Address: -; phone number: -; Email: oudyza.oktavia.putri-2019@feb.unair.ac.id

Zayyan Ahmad Nuryaddin, Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga

Nuryaddin, Zayyan Ahmad is a Master’s student and Research Assistant at the Department of Accountancy, Faculty of Economics and Business, Universitas Airlangga. He earned his Bachelor’s degree in Accounting from Universitas Muhammadiyah Malang and his Master’s degree from Universitas Airlangga. His research interests
include corporate governance, sustainability, and financial accounting.
Author’s contact detail: Address: -; phone number: -; Email: zayyan.ahmad.nuryaddin-2023@feb.unair.ac.id

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