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Management entrenchment and the cost of equity capital

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  • Collins, Denton
  • Huang, Henry

Abstract

This paper investigates the effect of management entrenchment on the cost of equity capital. Using the Bebchuk et al. (2009) entrenchment index data from 1989 through 2002, and using mainly the Ohlson and Juettner-Nauroth (2005) method to estimate the cost of capital, we find that increases (decreases) in management entrenchment are associated with increases (decreases) in costs of equity capital.

Suggested Citation

  • Collins, Denton & Huang, Henry, 2011. "Management entrenchment and the cost of equity capital," Journal of Business Research, Elsevier, vol. 64(4), pages 356-362, April.
    • Handle: RePEc:eee:jbrese:v:64:y:2011:i:4:p:356-362
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