Relationship Between Corporate Governance and Cost of Equity Capital

Zandi, Gholamreza; Shahzad, Imran Ahmed; Bajaber, Nadia; Nowodziński, Paweł; Shahid, Muhammad Sadiq

doi:10.17512/pjms.2022.26.1.24

Cited by 2 publications

(1 citation statement)

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“…Many studies have focused on the impact of diversification and various aspects of corporate performance: reinvestment strategy (Mackey & Barney, 2013), capital costs and structure (Hann et al, 2013), corporate value (Kuppuswamy et al, 2014;Jara-Bertin et al, 2015;Nazarova, 2015;Hyland, 2003), profitability (Santarelli & Tran, 2016;Zahavi & Lavie, 2013;Becerra & Santaló, 2006;Dosi et al, 2020), production export (Gnangnon, 2021), land efficiency of business enterprises (Nurimbetov, 2017), corporate social responsibility (Patricia & Dastgir, 2017;Zandi et al, 2022) and dynamics of production sector diversification (Shikata et al, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Improving the assessment of the diversification of construction companies

Ginevičius

2023

Engineering Management in Production and Services

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Various indicators are used to determine the level of company diversification. Their adequacy largely depends on the structure of the production programme. Its essential feature is the comparative weight of the main product in the total scope of the company’s work. In this situation, the intensity of the diversification process is reflected by the decrease in the volume of this product due to the inclusion of new products in the production programme. In this case, the adequacy of the diversification indicator can be reflected by comparing the scale of the main product with changes in the value of these indicators. The adequacy will be higher with more changes in the values of diversification indicators corresponding to changes in the volumes of the main product. Four indicators of corporate diversification are the most well-known and widely used: the Berry index, the entropy measure, Utton’s measure and the DG index. All of them have both strong and weak sides, so it is important to determine situations of the company’s production programme in which diversification indicators are appropriate to use, i.e., in which situations their adequacy is the greatest. The research has established that if the comparative weight of the main product of the production programme in the total scope of work is greater than 0.5, then the adequacy of the entropy measure and index DG is higher compared to the Berry index and Utton’s measure. If it is lower than 0.5, the other two diversification indicators should be used. The obtained results will help to more efficiently manage the process of diversification as a company’s development strategy.

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Section: Literature Reviewmentioning

confidence: 99%

Improving the assessment of the diversification of construction companies

Ginevičius

2023

Engineering Management in Production and Services

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Corporate governance and cost of equity: An empirical investigation of the United Arab Emirates stock market

Hayek,

Oudat,

Ali

et al. 2023

CBSR

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The set of rules, laws, and procedures that lead and regulate a firm is known as corporate governance (Alqaraleh et al., 2022). The primary objective of this study was to investigate the effect of the corporate governance index on the cost of equity for businesses listed on the United Arab Emirates (UAE) Stock Exchange. This study gathers data from yearly reports from 2015 to 2021 in order to test hypotheses using multiple linear regression models to analyze the gathered data. The independent variable of the corporate governance index in our research consists of eight distinct corporate governance characteristics. According to the findings of our investigation, there is a negative correlation between corporate governance and equity capital cost. This indicates that the quality of corporate governance may lower the cost of capital. In order to improve the quality of financial reporting, we advocate implementing a robust corporate governance framework and reducing information asymmetry, i.e., increasing transparency and agency conflict, therefore, attracting financial investors and suppliers, enhancing the capital market, and absorbing the organization’s required financial resources at a reduced rate. The study results suggest that corporations might minimize the cost of equity by creating excellent corporate governance. In the cost of equality, the result of the study emphasizes the significance and efficacy of corporate governance.

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Relationship Between Corporate Governance and Cost of Equity Capital

Cited by 2 publications

References 0 publications

Improving the assessment of the diversification of construction companies

Improving the assessment of the diversification of construction companies

Corporate governance and cost of equity: An empirical investigation of the United Arab Emirates stock market

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