Corporate Governance and Cost of Capital: Evidence from Emerging Market

Muhammad Yar Khan, Anam Javeed, Ly Kim Cuong and Ha Pham
Additional contact information
Anam Javeed: Department of Management Sciences, University of Wah, Wah 47040, Pakistan
Ly Kim Cuong: Faculty of Finance-Banking, Ho Chi Minh City Open University, Ho Chi Minh City 70000, Vietnam

Risks, 2020, vol. 8, issue 4, 1-29

Abstract: This study used a researcher self-constructed corporate governance index as a proxy to measure the firm-level corporate governance compliance and disclosure with the 2002 Pakistani Code of Corporate Governance, to examine the relationship between corporate governance and cost of capital. We found a negative and significant association between the Pakistani Corporate Governance Index (PCGI) and block ownership with the firm-level cost of capital. On average, better-governed Pakistani listed firms tend to be associated with a lower cost of capital than their poorly governed counterparts are. As an emerging market, good corporate governance practices are mainly related to minimise corporate failure and assist firms in attracting capital at a lower cost.

Keywords: corporate governance index; cost of capital; ownership structures; government; director; Pakistan (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:8:y:2020:i:4:p:104-:d:425539

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