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Volume 8
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10.3390/risks8040104
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Article

Corporate Governance and Cost of Capital: Evidence from Emerging Market

by
Muhammad Yar Khan
1,
Anam Javeed
2,
Ly Kim Cuong
3 and
Ha Pham
3,*
1
Department of Management Sciences, COMSATS University Islamabad, Wah Campus 47040, Pakistan
2
Department of Management Sciences, University of Wah, Wah 47040, Pakistan
3
Faculty of Finance-Banking, Ho Chi Minh City Open University, Ho Chi Minh City 70000, Vietnam
*
Author to whom correspondence should be addressed.
Risks 2020, 8(4), 104; https://doi.org/10.3390/risks8040104
Submission received: 28 June 2020 / Revised: 13 August 2020 / Accepted: 15 September 2020 / Published: 9 October 2020
(This article belongs to the Special Issue The Nexus of Financial Stability and Financial Access: The Role of Financial Infrastructure)
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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 corporate governance index; cost of capital; ownership structures; government; director; Pakistan

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MDPI and ACS Style

Khan, M.Y.; Javeed, A.; Cuong, L.K.; Pham, H. Corporate Governance and Cost of Capital: Evidence from Emerging Market. Risks 2020, 8, 104. https://doi.org/10.3390/risks8040104

AMA Style

Khan MY, Javeed A, Cuong LK, Pham H. Corporate Governance and Cost of Capital: Evidence from Emerging Market. Risks. 2020; 8(4):104. https://doi.org/10.3390/risks8040104

Chicago/Turabian Style

Khan, Muhammad Yar, Anam Javeed, Ly Kim Cuong, and Ha Pham. 2020. "Corporate Governance and Cost of Capital: Evidence from Emerging Market" Risks 8, no. 4: 104. https://doi.org/10.3390/risks8040104

APA Style

Khan, M. Y., Javeed, A., Cuong, L. K., & Pham, H. (2020). Corporate Governance and Cost of Capital: Evidence from Emerging Market. Risks, 8(4), 104. https://doi.org/10.3390/risks8040104

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