Mohammad Alkayed

Type of the article: Research Article

Abstract
Interest paid by companies on the debt acquired to finance their operations is a major factor that influences their financial performance and long-term growth opportunities. This paper aims to examine whether Chief Executive Officers’ (CEOs) personal and professional characteristics, including age, academic qualification, managerial experience, stock ownership, duality, and tenure, impact companies’ cost of debt using a sample of service and manufacturing firms listed on the Amman Stock Exchange during the period 2015–2023. The cost of debt is represented by the effective interest rate paid by a company on its debts, which is determined by dividing the firm’s interest expense at the end of the year by the firm’s average total debts. Based on fixed effect regression analysis, the results indicate that firms’ cost of debt exhibits significant negative relationships with both CEO academic qualifications and practical experience (p < 0.05), while the relationships between the cost of debt and CEO age, stock ownership, duality, and tenure are insignificant (p > 0.10). These results suggest that highly educated and experienced CEOs tend to make more efficient financial decisions, which enhances creditors’ trust in the company and is reflected in a reduced cost of debt.