IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v12y2024i1p2417754.html
   My bibliography  Save this article

Common institutional ownership and cost of equity: evidence from publicly listed companies in China

Author

Listed:
  • Larry Su

Abstract

Using data from 2682 publicly listed companies in China between 2012 and 2022, the study employs panel data regression to investigate the impact of common institutional ownership (CIO) on the cost of equity (COE). The findings indicate that CIO significantly reduces COE, with this reduction attributed to two main factors: the exit threat of common institutional investors (CIIs) and the synergistic governance effect. The results remain robust across alternative measures of COE using the PEG and MPEG models proposed by Easton (2004), as well as endogeneity tests utilizing Two Stage Least Squares. Moreover, the study identifies several factors that influence the strength of the CIO-COE relationship, including industry competitiveness, corporate governance quality, and financing constraints. The findings highlight the importance of leveraging the advantages of CIO in corporate supervision and governance, while also emphasizing the need for effective regulation to prevent collusive behavior and promote market efficiency.The implications of the study contribute to a better understanding of the role of CIO in shaping the COE and have implications for policymakers, regulators, and market participants seeking to enhance corporate governance practices and reduce the COE.

Suggested Citation

  • Larry Su, 2024. "Common institutional ownership and cost of equity: evidence from publicly listed companies in China," Cogent Economics & Finance, Taylor & Francis Journals, vol. 12(1), pages 2417754-241, December.
  • Handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2417754
    DOI: 10.1080/23322039.2024.2417754
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2024.2417754
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/23322039.2024.2417754?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:12:y:2024:i:1:p:2417754. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.