We examine the relation between the cost of debt financing and a governance index that contains various antitakeover and shareholder protection provisions. Using firm-level data from the Investors Research Responsibility Center for the period 1990–2000, we find that antitakeover governance...

type="main" <title type="main">ABSTRACT</title> <p>We find that firms mitigate refinancing risk by increasing their cash holdings and saving cash from cash flows. The maturity of firms’ long-term debt has shortened markedly, and this shortening explains a large fraction of the increase in cash holdings over time....</p>