Institutional Ownership and Cost of Capital: An International Study - Theoretical Economics Letters

TEL > Vol.10 No.5, October 2020

Theoretical Economics Letters

Volume 10, Issue 5 (October 2020)

ISSN Print: 2162-2078 ISSN Online: 2162-2086

Google-based Impact Factor: 1.19 Citations h5-index & Ranking

Institutional Ownership and Cost of Capital: An International Study ()

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Download as PDF (Size: 316KB) PP. 1031-1043

DOI: 10.4236/tel.2020.105060 550 Downloads 1,830 Views Citations

Author(s)

Aws AlHares^1,2, Gerard Dominic², Tarek Abu-Asi²

Affiliation(s)

¹Department of Accountancy and Finance, Business School, University of Huddersfield, Huddersfield, UK.
²School of Business Management & Information Technology, College of the North Atlantic in Qatar, Doha, Qatar.

ABSTRACT

This study investigates the impact of Institutional Ownership on Cost of Capital. A panel data of 200 companies from FORBES 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.

KEYWORDS

Institutional Ownership, Cost of Capital, Institution Theory, Ownership Structure, FORBES

Share and Cite:

AlHares, A. , Dominic, G. and Abu-Asi, T. (2020) Institutional Ownership and Cost of Capital: An International Study. Theoretical Economics Letters, 10, 1031-1043. doi: 10.4236/tel.2020.105060.

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