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Corporate Governance and Cost of Capital: Evidence from Emerging Market

Author

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  • Muhammad Yar Khan

    (Department of Management Sciences, COMSATS University Islamabad, Wah Campus 47040, Pakistan)

  • 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)

  • Ha Pham

    (Faculty of Finance-Banking, Ho Chi Minh City Open University, Ho Chi Minh City 70000, Vietnam)

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.

Suggested Citation

  • Muhammad Yar Khan & Anam Javeed & Ly Kim Cuong & Ha Pham, 2020. "Corporate Governance and Cost of Capital: Evidence from Emerging Market," Risks, MDPI, vol. 8(4), pages 1-29, October.
  • Handle: RePEc:gam:jrisks:v:8:y:2020:i:4:p:104-:d:425539
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