IDEAS home Printed from https://ideas.repec.org/a/ids/ijcgov/v2y2011i3-4p217-236.html
   My bibliography  Save this article

Corporate governance quality and the cost of capital

Author

Listed:
  • Yves Bozec
  • Richard Bozec

Abstract

The objective of this study is to further investigate what channel causes firms with weak (strong) corporate governance to be valued less (more) by investors. Specifically, we examine the relationship between corporate governance scores and firms' cost of capital, including both equity capital and debt. This research is conducted in Canada over a four-year period from 2002 to 2005 and uses panel data of 155 S&P/TSX firms. The quality of firm-level governance is measured based on the ROB index published by The Globe and Mail. Using fixed-effect regressions in a 2SLS framework, we find strong evidence that the cost of equity/debt decreases as the quality of corporate governance practices increases. Canadian firms with higher ROB scores have a lower cost of capital.

Suggested Citation

  • Yves Bozec & Richard Bozec, 2011. "Corporate governance quality and the cost of capital," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 2(3/4), pages 217-236.
    • Handle: RePEc:ids:ijcgov:v:2:y:2011:i:3/4:p:217-236
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=44376
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Naseem Ahamed & Nitya Nand Tripathi, 2023. "Financial Performance as a Determinant of The Cost of Capital: An Empirical Study on Listed Companies in India," Capital Markets Review, Malaysian Finance Association, vol. 31(2), pages 69-87.
    2. Peixin Li & Rongxi Zhou & Yahui Xiong, 2020. "Can ESG Performance Affect Bond Default Rate? Evidence from China," Sustainability, MDPI, vol. 12(7), pages 1-12, April.
    3. Muhammad Yar Khan & Anam Javeed & Ly Kim Cuong & Ha Pham, 2020. "Corporate Governance and Cost of Capital: Evidence from Emerging Market," Risks, MDPI, vol. 8(4), pages 1-29, October.
    4. Rahul Govind Pramani & Sandeep Goel & Rupamanjari Sinha Ray & A. Sarath Babu, 2023. "Corporate governance practices in the mining industry of India: an application of CG index," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(3), pages 481-498, September.
    5. Ge Ge & Xiang Xiao & Zhenzhu Li & Qinghui Dai, 2022. "Does ESG Performance Promote High-Quality Development of Enterprises in China? The Mediating Role of Innovation Input," Sustainability, MDPI, vol. 14(7), pages 1-24, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ids:ijcgov:v:2:y:2011:i:3/4:p:217-236. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=260 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.