Corporate General Counsels in Top Management Teams: Do They Impede or Facilitate Efficient Debt Contracting?

We investigate whether corporate general counsels (CGCs) in top management teams (TMT) influence bank debt costs. Analysing 1827 US syndicate loans in the post‐global financial crisis period (2010–2018), our findings indicate that CGCs‐in‐TMT are associated with a reduction in the overall cost of bank debt. Specifically, they impact the indirect rather than the direct cost of bank debt, with a more pronounced influence in high‐information asymmetry and high‐credit risk environments. Our study contributes to debt contracting literature, highlighting CGCs‐in‐TMT as an efficient alternative monitoring mechanism, reducing the cost of bank debt.