Corporate governance and cost of capital in OECD countries

AlHares, Aws

doi:10.1108/ijaim-02-2019-0023

Cited by 30 publications

(20 citation statements)

References 62 publications

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“…Therefore, the results above conclusion support the role of managerial ownership to enhance fixed performance and reduce the cost of equity. These results are consistent with studies (Ashbaugh, 2004; Shah and Butt, 2009; Huang et al , 2009; Pham et al , 2012; Wan, 2015; Singhal, 2014; AlHares, 2019). According to control variables with the cost of equity, the leverage ( LEV ) is a significant negatively associated with the cost of equity.…”

Section: Resultssupporting

confidence: 92%

“…The results of the fourth hypothesis indicate that a significant negative impact between managerial ownership with the cost of equity. In other words, this means when managerial ownership increases, the cost of equity will be reduced, these results are consistent with our expectations and the same as (Ashbaugh et al , 2004; Shah and Butt, 2009; Huang et al , 2009; Pham et al , 2012; Wan, 2015; Singhal, 2014; AlHares, 2019). Table 9 also shows effect control variables on the cost of equity.…”

Section: Resultssupporting

confidence: 92%

“…In other words, this means when it increases managerial ownership, the cost of equity will be reduced. The above conclusion supports the role of managerial ownership to enhance fixed performance and reduce the cost of equity (Ashbaugh et al , 2004; Shah and Butt, 2009; Huang et al , 2009; Pham et al , 2012; Wan, 2015; Singhal, 2014; AlHares, 2019). Ashbaugh et al (2004) say that managerial ownership makes the interests of shareholders more in line with the interests of other shareholders, which reduces the agency’s problem between managers and minority shareholders and external shareholders (Huang et al , 2009).…”

Section: Discussionsupporting

confidence: 62%

“…The impact of the relationship between managerial ownership on the cost of equity. The studies of Ashbaugh et al (2004), Shah and Butt (2009), Huang et al (2009), Pham et al (2012), Singhal (2014), Wan (2015) and AlHares (2019), the impact of the relationship between managerial ownership with the cost of equity, all of them found a significant negative relationship between managerial ownership and the cost of equity. The results above can be explained in another way, the increase in managerial ownership leads to reducing the cost of equity.…”

Section: Theoretical Literature and Hypothesis Developmentmentioning

confidence: 98%

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The impact of ownership structure on the cost of equity in emerging markets

Faysal

Salehi

Moradi

2020

MRR

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Purpose The purpose of this study is to cover the ownership structure as (institutional ownership and managerial ownership) influencing the cost of equity in emerging markets. Design/methodology/approach The authors applied the regression model with the fixed-effect model in the data. Data collected from listed companies in the Iraq-Iran Stock Exchange during 2012-2017. Findings The authors found a significant positive associated between institutional ownership and the cost of equity in the Iranian and Iraqi contexts. The results also reveal a significant negative associated between managerial ownership with the cost of equity in the Iranian and Iraqi contexts. This means that when managerial ownership is increased, the cost of equity will be reduced. These results support the role of inside ownership to enhance fixed performance by reducing the cost of equity. So, managerial ownership can be a substitute for all shareholders. Moreover, the results indicate a similarity in the impact of the ownership structure on the cost of equity in the Iraqi and Iranian context, this means the similar elements among west Asian countries. Research limitations/implications Financial companies such as banks and investment companies were not listed due to the difference in the nature of their work with the other sectors in the Iranian and Iraqi stock exchanges. Moreover, the authors are heavily constrained as listed companies must continue during the study period to calculate the cost of equity. Therefore, the results are difficult to generalize widely. Practical implications This international study will enable investors in, as well as local and international investors to take the appropriate investment decision-making in the capital markets in these countries (Iraq and Iran). Moreover, it contributes significantly to helping corporate governance bloggers in Iraq and Iran understand the role of the ownership structure in corporate governance. Originality/value This is the first study of the interaction between institutional ownership, managerial ownership with the cost of equity in Iraq, the study will help complete the knowledge gap with developed markets. The results are important in future research because the authors believe that it is very important for the future to look at better for percentage levels of institutional and managerial ownership in the company ownership. Although the contribution is limited, it will provide a useful guide for more papers in other west Asian countries.

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Section: Resultssupporting

confidence: 92%

Section: Resultssupporting

confidence: 92%

Section: Discussionsupporting

confidence: 62%

Section: Theoretical Literature and Hypothesis Developmentmentioning

confidence: 98%

See 2 more Smart Citations

The impact of ownership structure on the cost of equity in emerging markets

Faysal

Salehi

Moradi

2020

MRR

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“…According to these researchers, there are generally lower costs of capital in countries with strong securities regulation, and where there are legal mechanisms for enforcing the law (Hail & Leuz, 2006;AlHares, 2020b). The rationale here is that there are mechanisms in place that would ensure that shareholders' rights are to some degree protected in case of default.…”

Section: Introductionmentioning

confidence: 99%

Institutional Ownership and Cost of Capital: An International Study

AlHares¹,

Dominic²,

Abu-Asi³

2020

TEL

Self Cite

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This study investigates the impact of Institutional Ownership on Cost of Capital. A panel data of 200 companies from FORBES Global 2000 Leading Companies between 2010 and 2019 were used. The ordinary least square multiple regression analysis technique is used to examine the relationships. The findings are robust to alternative measures and endogeneities. The results show that institutional ownership is statistically positively related to cost of capital. This study extends, as well as contributes to the extant corporate governance literature by offering new evidence on the effect of institutional ownership on cost of capital. The findings will help regulators and policy-makers in evaluating the adequacy of the current corporate governance reforms to prevent management misconduct and scandals.

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Social and environmental reporting, sustainable development and institutional voids: Evidence from a developing country

Alshbili

Elamer

Moustafa

2020

Corp Soc Responsibility Env

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This study adopts the concept of institutional voids to examine the perceptions of managers and policymakers in developing markets with respect to the actual barriers that hinder social and environmental reporting (SER) towards sustainable development. The study uses in‐depth semi‐structured interviews with managers and decision‐makers and policymakers of the main oil and gas companies in weak institutional settings (Libya). The findings suggest that the absence of environment general authority's role, the absence of a clear legal requirement that refers to SER, the shortage of knowledge and awareness, the lack of motivation from the government, fear of change, and the absence of civil society organisations are perceived as the major barriers that hinder the development of SER. These findings contribute to the literature on institutional voids and sustainable development by providing evidence on SER barriers in the context of a developing country. Therefore, it could be useful to corporate regulators and policymakers to mitigate institutional voids to develop a more focussed SER agenda, when considering regulations for the disclosure and sustainable development.

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Corporate governance and cost of capital in OECD countries

Cited by 30 publications

References 62 publications

The impact of ownership structure on the cost of equity in emerging markets

The impact of ownership structure on the cost of equity in emerging markets

Institutional Ownership and Cost of Capital: An International Study

Social and environmental reporting, sustainable development and institutional voids: Evidence from a developing country

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