Does integration lead to lower costs of equity?

Jessica Dye, Aaron Gilbert and Gail Pacheco

Australian Journal of Management, 2017, vol. 42, issue 1, 86-112

Abstract: Recent evidence has suggested that the benefits of equity market integration may not be shared equally by all firms. Making use of a firm-level measure of integration we investigate whether one of the documented benefits of equity market integration, lower cost of equity capital (COEC), holds for all Australian firms. Empirical evidence suggests that the degree of integration is reflected in firm COEC, albeit not in the expected way. Our results indicate that increased integration at the firm level leaves firms exposed to higher COEC when world market conditions are volatile.

Keywords: Cost of equity capital; equity markets; integration (search for similar items in EconPapers)
JEL-codes: C33 F36 G32 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:42:y:2017:i:1:p:86-112

DOI: 10.1177/0312896215576810

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