Please use this identifier to cite or link to this item: http://prr.hec.gov.pk/jspui/handle/123456789/16861
Title: The Corporate Governance Practices and Cost of Capital: Evidence from Asian Countries
Authors: Anwar, Zeeshan
Keywords: Business Education
Accounting and Finance
Issue Date: 2019
Publisher: The University of Lahore, Lahore.
Abstract: This research investigates the relationship of corporate governance mechanisms with cost of capital for the World’s largest multinational companies in Asian countries for the period of 2006 to 2015. The cost of capital for multinational firms have been represented by cost of equity (COE), cost of debt (COD) and weighted WACC. Three regression models have been tested for determining the relationship of each dependent variable with corporate governance and control variables. The sample of this research is selected from 762 multinational firms in 24 Asian countries listed in World’s Largest Public Companies by “Forbes Global 2000”. The results of first regression model in which COE has been taken as dependent variable demonstrate that the variables of board independence, ownership concentration, sales growth and volatility of stock prices have positive and significant association with cost of equity, whereas, the variables of audit committee independence, QCG and leverage have negative and significant correlation with COE. The results of second regression model in which COD has been taken as dependent variable demonstrate that the variables of ownership concentration, QCG, leverage, ROA, sales growth and volatility of stock prices have positive and significant association with COD, whereas, the variables of board independence, audit committee independence and firm size have negative and significant correlation with COD. The results of third regression model in which WACC has been taken as dependent variable indicate that the variables of ownership concentration, leverage, ROA, sales growth and volatility of stock prices have positive and significant association with WACC, whereas, the variables board independence and firm size have negative and significant correlation with WACC. The results depict that better governance practices result in lowering cost of capital for Asian multinationals. The validity and robustness of findings related to relationship of governance practices and cost of capital have been further verified by taking firm’s profitability as dependent variable and governance practices as independent variables. The findings depict that governance practices have positive impact in improving firm performance. So, it being concluded that governance practices results in lower cost of capital and higher profitability for Asian multinationals. Keywords: Cost of equity, cost of debt, WACC, ROA, sales growth, Asian countries, multinational firms
Gov't Doc #: 21715
URI: http://prr.hec.gov.pk/jspui/handle/123456789/16861
Appears in Collections:PhD Thesis of All Public / Private Sector Universities / DAIs.

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