scholarly journals Institutional investors and cost of capital: The moderating effect of ownership structure

PLoS ONE ◽  
2021 ◽  
Vol 16 (4) ◽  
pp. e0249963
Author(s):  
Xiaoping Huo ◽  
Hongying Lin ◽  
Yanan Meng ◽  
Peter Woods
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Capital Market ◽  
Institutional Investors ◽  
Cost Of Capital ◽  
Listed Companies ◽  
Moderating Effect ◽  
Theory And Practice ◽  
The Cost ◽  
The Relationship

Guiding institutional investors to actively participate in corporate governance is a hot issue to improve the internal governance of China’s listed companies. This study seeks to provide a comprehensive understanding of the mechanism that underlies the governance effects of the heterogeneity of institutional investors on the cost of capital, and the influence of ownership structure on the relationship between them. Using an unbalanced panel data on A-share listed companies of Shanghai and Shenzhen in China’s capital market during the 2014–2019 period, this study reveals how institutional investors with longer holding period and higher shareholding ratio are negatively associated with the cost of capital in China’s capital market. Furthermore, this study successfully confirms the moderating effect of ownership structure in the relationship between institutional investors and the cost of capital. China’s state-owned enterprises are more likely to introduce improvements at the corporate governance level, and ownership concentration weakens the negative influence of institutional investors on the cost of capital. The research contributes to a deeper understanding of the impacts of institutional investor’s heterogeneity and ownership structure on the cost of capital in China. In the process, the study yields useful implications for the theory and practice of corporate governance.

Corporate governance and cost of equity: empirical evidence from Latin American companies

2016 ◽  
Vol 16 (5) ◽  
pp. 831-848 ◽  
Author(s):  
Emanuele Teti ◽  
Alberto Dell’Acqua ◽  
Leonardo Etro ◽  
Francesca Resmini
Keyword(s):  
Corporate Governance ◽  
Latin American ◽  
Cost Of Capital ◽  
Negative Relationship ◽  
Developed Countries ◽  
Equity Capital ◽  
Cost Of Equity ◽  
Content Type ◽  
The Cost ◽  
The Relationship

Purpose This paper aims to investigate the extent to which corporate governance (CG) systems adopted by Latin American listed firms affect their cost of equity capital. Several studies on the link between the two aforementioned dimensions have been carried out, but none in the context of Latin American firms. Design/methodology/approach A CG index is created by taking into account the peculiarities of each country and the recommendations given by the corresponding CG institutes. In particular, to assess the level of CG quality, three sub-indexes have been identified: “Disclosure”, “Board of Directors” and “Shareholder Rights, Ownership and Control Structure”. Findings The results indicate a negative relationship between CG quality and the cost of equity. In particular, the “Disclosure” component is the one mostly affecting the cost of equity. Research limitations/implications This study contributes to the literature by adding knowledge on the relationship between CG and cost of capital considering, for the first time, the overall Latin American market. Practical implications The paper proves that institutional investors all over the world are disposed to pay a premium to invest in firms with effective CG standards; moreover, this premium is higher in emerging countries such as those analyzed in this paper, rather than in developed countries. Originality/value To the authors' knowledge, this is the first paper empirically investigating the relationship between CG and cost of capital in Latin America.

SUSTAINABILITY REPORT, OWNERSHIP TYPES, AND COST OF CAPITAL: EVIDENCE ON INVESTORS’ REACTION OF INDONESIAN LISTED COMPANIES

2020 ◽  
Vol 7 (6) ◽  
pp. 1246-1255
Author(s):  
Raisya Arum Sari ◽  
Hilda Rossieta
Keyword(s):  
Perceived Risk ◽  
Cost Of Capital ◽  
Low Cost ◽  
Listed Companies ◽  
Continuous Variable ◽  
Moderating Effect ◽  
Secondary Source ◽  
The Cost ◽  
Sustainability Report ◽  
Ownership Types

Purpose: This research aims to examine investors’ reactions to the Sustainability Report (SR) and the moderating effect of ownership types associated with stakeholders’ interdependence theory. Methodology: This research uses purposive sampling method to choose the samples. The population of the samples is Indonesian listed companies that disclose sustainability reports from 2014 to 2016. This research uses secondary data using several data sources, such as the annual report, financial report, sustainability report, data stream database, and another secondary source. Results: In general, empirical evidence indicate that investors appreciate sound SR performance by the tendency to give a discount on their investment; hence, they charge low Cost of Capital. Also, types of ownership do have a moderating effect on investors’ reaction, suggesting the existence of interdependent among stakeholders group. Implications: This research captures investors' reactions by looking at the Cost of the Capital bear by the company as a proxy for investor reaction on the perceived risk associated with the sustainability issues. Moreover, this research converts the Cost of Capital as a continuous variable into a categorical variable of high and low.

scholarly journals Corporate social performance, cost of capital and the ownership in Taiwanese advantage technology industry

2012 ◽  
Vol 9 (3) ◽  
pp. 195-203 ◽  
Author(s):  
Chiaming Wu ◽  
Chin-Hsien Hsieh ◽  
Fengyi Lin
Keyword(s):  
Ownership Structure ◽  
Cost Of Capital ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Matching Method ◽  
Technology Industry ◽  
Propensity Matching ◽  
Corporate Social ◽  
The Cost ◽  
The Relationship

This study discusses how corporate social responsibility (CSR) affects firm’s cost of capital in Taiwan advantage technology industry including semiconductor and photoelectric industry in the Taiwan Stock Market with different ownership structure. We match sample by propensity matching method and analyze the relationship between corporate social performance (CSP) and the cost of capital. Our results show the CSP has negative significant effects with cost of capital under family-owned companies, but no significant effects with non-family-owned companies. This study further address how media reported CSR news affects both shareholders’ reaction and firm’s cost of capital.

CSR and cost of capital: evidence from Japan

2017 ◽  
Vol 13 (4) ◽  
pp. 798-816 ◽  
Author(s):  
Megumi Suto ◽  
Hitoshi Takehara
Keyword(s):  
Ownership Structure ◽  
Capital Market ◽  
Cost Of Capital ◽  
Corporate Social Performance ◽  
Weighted Average ◽  
Cost Of Debt ◽  
Cost Of Equity ◽  
Content Type ◽  
Stakeholder Relationships ◽  
The Cost

Purpose This study aims to examine the link between corporate social performance (CSP) and the cost of capital of Japanese firms in 2008-2013, considering the influences of banking relationships and ownership structure. Design/methodology/approach It examines the relation between CSP and the cost of capital in terms of the cost of debt, cost of equity and weighted average cost of capital, using a composite CSP measure based on stakeholder relationships. A regression model is adopted, controlling for bank dependency, ownership structure and firm-specific attributes. Findings Institutional ownership influences the CSP–cost of equity relation and reduces the cost of equity, while CSP is perceived by debtors as not information-mitigating for the observed period. For 2008-2010, the relation between CSP and bank dependency increases the cost of debt; however, the positive influence of bank dependency on the cost of debt dilutes during 2010-2013 as the shift to a more market-oriented financial market in Japan occurs. Practical implications Although bank borrowing is important, especially for small firms, non-financial disclosure makes external financing more flexible. Institutional investors concerned about the non-financial aspects of business, therefore, play an important role in mitigating the information asymmetry that exists in the capital market. Originality/value This study extends research on the CSP–cost of capital link by considering structural changes in financial systems (e.g. capital market perception of CSP and banks as delegated monitors).

scholarly journals Corporate Governance, Capital Structure, Ownership Structure, And Corporate Value Of Companies Listed At The Nairobi Securities Exchange

2021 ◽  
Vol 17 (15) ◽  
Author(s):  
David Onguka ◽  
Cyrus M. Iraya ◽  
Winnie L. Nyamute
Keyword(s):  
Corporate Governance ◽  
Regression Analysis ◽  
Capital Structure ◽  
Ownership Structure ◽  
Firm Value ◽  
Joint Effect ◽  
Moderating Effect ◽  
Series Data ◽  
Corporate Value ◽  
The Relationship

This paper focuses on establishing the relationship among corporate governance, capital structure, ownership structure, and firm value for companies listed at the Nairobi Security Exchange (NSE). The study tested three hypotheses that explored various aspects of this relationship: First, there is no intervening effect on the capital structure on the relationship between corporate governance and corporate value; Second, there is no significant moderating effect of ownership structure on the relationship between corporate governance and corporate value; and finally, there is no significant joint effect of corporate governance, capital structure, and ownership structure on corporate value. The data of the study was obtained from audited financial statements of the firms listed at the NSE. A census survey for sixty-four publicly trading firms at the NSE was undertaken. The data of 64 corporations was cleaned, leaving a smaller number of 58 firms which formed over 90% of the sample. The analysis covered a five-year period between 2013 to 2017. The study adopted a positivism philosophy and a descriptive design. Descriptive statistics and diagnostic tests were undertaken and thereafter inferential statistics, specifically correlation and regression analysis, were used for hypothesis testing. The multiple regression analysis was used to test the relationship among corporate governance, capital structure, ownership structure, and corporate value. The panel data procedure was considered more appropriate as the sample data contained both cross-sectional and time-series data. The Baron and Kenny’s (1986) approach was used to assess the intervening and moderating effect of capital structure and ownership structure respectively on the relationship between corporate governance and corporate value. Corporate Governance was measured by a composite of board independence, board size, board remuneration, and corporate gender diversity. Capital structure was measured by leverage, while ownership structure was measured by ownership concentration, state ownership, family ownership, and foreign ownership. Firm performance was measured using the Tobin Q. The joint effect of corporate governance, capital structure, and ownership structure on corporate value was found to be positive and significant. However, Ownership structure and capital structure had no significant moderating and intervening effects respectively on the relationship between corporate governance and corporate value. This study makes an original contribution as it takes a more holistic approach of corporate governance development by probing whether improving corporate governance is linked to the enhanced corporate value. The study recommends that corporate shareholders, boards, regulators, and management of listed corporations should put in place robust policies. This will ensure the implementation and monitoring of corporate governance principles and ensure congruence in their activities of the oversight of corporate objectives of optimizing corporate value and minimizing fraud and failure risks of corporations.

scholarly journals Corporate performance and boards’ dilemma of listed subsidiaries

2013 ◽  
Vol 10 (4) ◽  
pp. 130-147 ◽  
Author(s):  
Emiliano Di Carlo ◽  
Francesco Ranalli
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Financial Performance ◽  
Ownership Structure ◽  
Corporate Performance ◽  
Listed Companies ◽  
The Impact ◽  
The Relationship ◽  
Parent Companies

The paper focuses on listed companies controlled by other (listed or not listed) entities. The decisionmaking power of listed subsidiary’s boards could be strongly influenced by (or instead could be autonomous from) the parent companies’ board. However, so far literature on corporate governance seems not to have considered adequately this aspect as well as the impact of that influence on listed companies’ financial performance and on corporate governance variables. The main objective of this paper is to explore how and why this phenomenon is relevant, giving some preliminary suggestions on the interpretation of the ownership structure, board demography and the financial performances of directed listed subsidiaries. In order to explore the relevance of the phenomenon, we use a sample of Italian listed companies controlled and consolidated by other companies for the year 2010. The analysis shows that 71.4% (145 firms) of Italian non-financial listed companies are consolidated by the respective controlling entities and 24.1% (35 firms) of these listed subsidiaries declare to be directed by their parents. Thus, they are not independent economic entities and the effort to study the relationship between corporate governance variables and firm performance could be strongly biased.

scholarly journals Corporate governance and firm performance: Evidence from Vietnamese listed companies

2020 ◽  
Vol 9 (2) ◽  
Author(s):  
Pham Thi Ngoc Bich ◽  
Nguyen Dinh Hoang Uyen
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Board Of Directors ◽  
Ownership Structure ◽  
Supervisory Board ◽  
Listed Companies ◽  
Managerial Ownership ◽  
Data Set ◽  
Management Ownership ◽  
The Relationship

The research aims to provide empirical evidence on the relationship between corporate governance and firm performance in Vietnam – a developing economy in Asia. It focuses on the corporate governance of Vietnamese listed companies with a data-set of the five-year period from 2011 to 2015. Vietnamese listed companies are governed and controlled by two boards, Board of Directors and Supervisory Board. The research investigates the impacts of directors’ and supervisors’ characteristics and ownership structure on firm performance. The outcomes reveal that most governance mechanisms employed by Vietnamese listed companies were not effective and had no effect on the companies’ performance, except for managerial ownership and Supervisory Board size. Specifically, management ownership and firm performance were negatively correlated. Additional analyses show a positive relationship between the number of supervisors and firm performance, which was measured by market-based measurement.

scholarly journals Does Ownership Structure Matter For Publicly Listed Companies Performance In Malaysia?

2015 ◽  
Author(s):  
Rozita Arshad
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Ownership Structure ◽  
Listed Companies ◽  
Governance Practices ◽  
Using Data ◽  
Open Markets ◽  
The Impact ◽  
The Relationship ◽  
Insight Into

The word of corporate governance has become a very important concept that requires many countries around the world to concentrate on its reformation. Globalisation of markets, open markets competition, and international business has generated awareness about the importance of improving corporate governance practices. Protecting shareholders and other stakeholders are also being attentive agenda and play important roles in corporate governance reforms due to ensure their value creation and their right as the owner of the shares. This article attempts to address this issue by examining the relationship between ownership structure and firm performance. The hypothesis is tested by assessing the impact of the structure of ownership on firm performance, using data for 237 Malaysia Public Listed Companies (PLCs). Therefore, this paper will provide an insight into further understanding on the issue of the relationship between ownership structure and firm performance Keywords: Corporate governance, ownership structure, shareholders, firm performance

Institutional Investors, Private Information, and the Cost of Capital

2011 ◽  
Author(s):  
Huong Giang (Lily) Nguyen ◽  
Xiangkang Yin ◽  
Luong Hoang Luong
Keyword(s):  
Private Information ◽  
Institutional Investors ◽  
Cost Of Capital ◽  
The Cost

Relationship among social tactics, job embeddedness, and affective commitment in newcomers: the moderating effect of workplace spirituality

2021 ◽  
pp. 1-21
Author(s):  
Hsien-Long Huang ◽  
Li-Keng Cheng ◽  
Pi-Chuan Sun ◽  
Yi Shiuan Jiang ◽  
Hsin Hua Lin
Keyword(s):  
Work Experience ◽  
Affective Commitment ◽  
Human Resources Management ◽  
Workplace Spirituality ◽  
Job Embeddedness ◽  
Moderating Effect ◽  
Empirical Examination ◽  
Employee Survey ◽  
The Cost ◽  
The Relationship

Abstract The cost of recruitment and training of newcomers can be a burden for enterprises, causing adverse effects on human resources management. Although much research has addressed employee turnover, less attention has been paid to methods of improving the retention of new hires. This study is an empirical examination of the increase in predictive strength of antecedents of affective commitment for comparing newcomers’ workplace spirituality. The results of an employee survey completed by 237 newcomers with under two years of work experience indicate that socialization tactics have a direct impact on job embeddedness, which in turn has a direct effect on affective commitment. Workplace spirituality has a significant moderating effect on the relationship between socialization tactics and job embeddedness. Also, workplace spirituality has a significant moderating effect on the relationship between job embeddedness and affective commitment.

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