Cost of entrepreneurial capital and under-diversification: A Euro-Mediterranean perspective
AbstractWe assess how owner's commitment to a firm influences the firm cost of capital, and whether the relation between the former and the latter is the consequence of the owner's higher opportunity cost of capital resulting from under-diversification. Using data on private Mediterranean firms and clustering projects by country, industry, and Initial Public Offering-year, we show that the cost of capital is magnified by entrepreneur's commitment, project total risk, and correlation between project and market return.
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Bibliographic InfoArticle provided by Elsevier in its journal Research in International Business and Finance.
Volume (Year): 27 (2013)
Issue (Month): 1 ()
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Web page: http://www.elsevier.com/locate/ribaf
Opportunity cost of capital; Commitment; Small and Medium Business; Entrepreneurship;
Find related papers by JEL classification:
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
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