Impact of corporate governance mechanisms on the cost of equity capital in emerging markets

Faysal, Saad Raad Faysal; Salehi, Mahdi; Moradi, Mahdi

doi:10.1002/pa.2166

Cited by 45 publications

(29 citation statements)

References 28 publications

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“…This model has already been implemented in Reverte (2012) In order to test the relation between CoE and the control and sustainable variables, we implement a fixed-effect panel data model according to the Hausman test, which analyzes the relation or absence of correlation between the independent variables with the error term (Hausman, 1978). In our study, the p-value of the Hausman test is lower than the 0.05 probability benchmark (0.0262), and therefore, we implement a fixed-effects model as in Faysal et al (2020) and Raimo et al (2020). Also, we lag the environmental score similar to Elsayed and Paton (2005), Horv athov a (2012) and El Ghoul et al (2018).…”

Section: Methodsmentioning

confidence: 99%

Sustainability in the food and beverage sector and its impact on the cost of equity

Jiménez

Zorio‐Grima

2021

BFJ

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PurposeThe objective of this paper is to analyze in an international setting the relationship between environmental disclosures, carbon emissions and gender equality on the board of directors with the cost of equity (CoE) in the food and beverage sector.Design/methodology/approachThe study sample includes 142 listed firms and 1,562 firm-observations from 35 developed and developing countries between 2009 and 2019. The authors implement a fixed-effects regression model to contrast the impact of the three sustainable variables of interest on the CoE.FindingsThe results of this study indicate that firms in the food and beverage industry benefit from a lower CoE due to better environmental disclosures and gender equality. On the other hand, carbon intensive firms are penalized with higher equity costs.Originality/valueThis study expands prior research on the effects of sustainable behavior on the CoE in the food and beverage industry by taking into account additional sustainability variables and a greater number of observations, both from developed and from developing countries.

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Section: Methodsmentioning

confidence: 99%

Sustainability in the food and beverage sector and its impact on the cost of equity

Jiménez

Zorio‐Grima

2021

BFJ

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“…Salehi et al (2020) found that the quality of corporate governance can lower the rate of capital cost in a sample of 975 observations during the period 2012 to 2018. Faysal et al (2021) also, documented a positive relationship board size and chief executive officer (CEO) tenure in reducing the CEO, and a positive role in audit quality in reducing the CEO in the Iranian context. Also, Faysal et al (2021) found a substantial positive related between institutional ownership and the cost of equity in the Iranian and Iraqi.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Faysal et al (2021) also, documented a positive relationship board size and chief executive officer (CEO) tenure in reducing the CEO, and a positive role in audit quality in reducing the CEO in the Iranian context. Also, Faysal et al (2021) found a substantial positive related between institutional ownership and the cost of equity in the Iranian and Iraqi. Thompson and Manu (2021) stated that the corporate governance characteristics (i.e.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corporate governance: association the spots between institutional enhancement, organisational modification and earnings quality

Almasarwah

Alrawabdeh

Masadeh

et al. 2022

JFRC

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Purpose The purpose of this paper is to explore the link between earnings quality, Audit Committees and the Board of companies located in Jordan through the lens of enhancing corporate governance. Design/methodology/approach The real earnings management (REM) and accruals earnings management models were notably used within the panel data robust regression analysis approach; these were used against certain Audit Committee characteristics (i.e. meeting frequency, amount of Board and Committee participants [both internal and external], size) and Board of Directors. Findings The former characteristics were found to have a positive relationship with REM, while the latter yielded mixed results: while there was no significant identifiable relationship between Board outsiders and REM, there was a positive relationship identified between Board meetings, Board insiders and Board size and REM. In regard to this study’s limitations, the qualitative data gathered for the Board of Directors through the lens of corporate governance enhancement should have been documented with more detail; furthermore, the study was limited to the study of just one nation. Research limitations/implications The data is limited to only a single country. More explanation for Board of Directors need qualitative understandings into corporate governance improvement. The control variables are essentially partial in a developing market context. Practical implications The different corporate governance code and guidelines improvements have varied influence on earnings quality. As predictable, boards of directors most effect on earnings quality. Improvements have included most modification to audit committees but through them slight measured effect on earnings quality. Social implications Jordan’s corporate governance improvements expected organised corporate governance practices generally in place amongst its boards, and though invoking considerable modification to audit committees, eventually included slight modification to earnings quality. However, both improved earnings quality. Originality/value This particular research appears to be the first to consider both Audit Committee and Board of Directors characteristics in one model; indeed, in this vein, this research is also the first to explore the corporate governance enhancements that initially stemmed from there being zero code or guideline regarding its use, despite it becoming required recently. Hence, the authors can say this study has high originality.

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“…Moreover, information asymmetry in banking in emerging markets has been discussed in the recent literature (Tsindeliani and Mikheeva 2021 ; Ghorbani and Salehi 2020 ; Faysal et al. 2021 ).…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Bank loan information and information asymmetry in the stock market: evidence from China

Wang

Yang

2022

Financ Innov

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In this study, we use bank loan information to construct proxies for corporate transparency and examine whether these measures reflect information asymmetry in the stock market. Our analysis is based on a novel dataset of stock transactions and bank loans of all publicly listed firms on the Shenzhen Stock Exchange, covering January 2008 to June 2013. We find that firms with outstanding loans have a lower level of information asymmetry in the stock market, whereas firms with defaulted loans have a higher level of asymmetry. Further evidence demonstrates that the effect of loan default on information asymmetry in the stock market is more pronounced when these loans are borrowed from joint-equity commercial banks or multiple banks and when the default occurs under inactive market conditions. Our results remain robust to a series of endogeneity and sensitivity tests and provide suggestive evidence of a close connection between the credit loan and stock markets.

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Impact of corporate governance mechanisms on the cost of equity capital in emerging markets

Cited by 45 publications

References 28 publications

Sustainability in the food and beverage sector and its impact on the cost of equity

Sustainability in the food and beverage sector and its impact on the cost of equity

Corporate governance: association the spots between institutional enhancement, organisational modification and earnings quality

Bank loan information and information asymmetry in the stock market: evidence from China

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