تلخیص
The study analyzes the impact of corporate governance attributes on cost of
equity capital. For the purpose of analysis, a sample of 230 non-financial firms
listed on Pakistan Stock Exchange is analyzed from 2003-14. Corporate
governance is measured by ten proxies such as board size, board independence,
board meetings, CEO duality, concentrated ownership, institutional ownership,
managerial ownership, Big-5 ownership, audit quality and audit committee
composition whereas the cost of equity capital is estimated using two
approaches suggested by Estrada (2002) i.e., Downside Capital Asset Pricing
Model (DCAPM) and Capital Asset Pricing Model (CAPM). The individual
firm and industry level analysis is conducted using panel data. The results
showed that board independence, CEO duality, institutional ownership and audit
quality have statistically significant impact on cost of equity capital. Further, the
research suggests that DCAPM is more suitable measure of cost of equity for the
Pakistani listed firms than CAPM. In addition to it, the industry analysis
confirmed that the impact of corporate governance mechanism is not
homogenous across different industries.
Shoib Hassan, Ghulam Mujtaba Kayani, Usman Ayub. (2018) Corporate Governance and Cost of Equity Capital using DCAPM, Abasyn Journal of Social Sciences, Volume-11, Issue-2.
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