TITLE:
Institutional Ownership and Cost of Capital: An International Study
AUTHORS:
Aws AlHares, Gerard Dominic, Tarek Abu-Asi
KEYWORDS:
Institutional Ownership, Cost of Capital, Institution Theory, Ownership Structure, FORBES
JOURNAL NAME:
Theoretical Economics Letters,
Vol.10 No.5,
September
11,
2020
ABSTRACT: This study investigates the impact of Institutional
Ownership on Cost of Capital. A panel data
of 200 companies fromFORBES Global 2000 Leading Companies between 2010 and 2019 were used. The ordinary least square multiple regression
analysis technique is used to examine the relationships. The findings are
robust to alternative measures and endogeneities. The results show that
institutional ownership is statistically positively related to cost of capital.
This study extends, as well as contributes to the extant corporate governance literature by offering new evidence on
the effect of institutional ownership on cost of capital. The findings will
help regulators and policy-makers in evaluating the adequacy of the
current corporate governance reforms to prevent management misconduct and
scandals.