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Management entrenchment and the cost of equity capital

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  • Collins, Denton
  • Huang, Henry
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    Abstract

    This paper investigates the effect of management entrenchment on the cost of equity capital. Using the Bebchuk et al. (2009) entrenchment index data from 1989 through 2002, and using mainly the Ohlson and Juettner-Nauroth (2005) method to estimate the cost of capital, we find that increases (decreases) in management entrenchment are associated with increases (decreases) in costs of equity capital.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 64 (2011)
    Issue (Month): 4 (April)
    Pages: 356-362

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    Handle: RePEc:eee:jbrese:v:64:y:2011:i:4:p:356-362

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    Web page: http://www.elsevier.com/locate/jbusres

    Related research

    Keywords: Cost of capital Management entrenchment Governance risk;

    References

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