Abstract:
Cost of debt provides signals not only concerning how firms are financed but also
pertaining to the ability of managers to improve firms’ bottom line-income statement
item. Research has shown that good corporate governance practice can lead to an
optimum cost of debt. While there has been research examining corporate governance
practices and cost of debt in other contexts, there is however a general lack of research
that investigate this issue within the Arab or Middle East context, particularly in the
setting of the Sultanate of Oman. This study contains four types of investigations. First
it examines whether the cost of debt is influenced by the board of directors and audit
committee effectiveness. Second, it investigates whether family ownership moderates the
relationship between board of director and audit committee effectiveness and cost of debt.
Third, it inspects whether government ownership moderates the relationship between the
board of director and audit committee effectiveness and cost of debt.
