GMSR - Global Management Sciences Review

THE EFFECT OF CHIEF EXECUTIVE OFFICER DOMINANCE AND SHAREHOLDER RIGHTS ON COST OF EQUITY CAPITAL IN PAKISTAN

http://dx.doi.org/10.31703/gmsr.2020(V-III).09 10.31703/gmsr.2020(V-III).09
Authored by : Yawar Miraj Khilji , Shehzad Khan , Muhammad Faizan Malik

09 Pages : 84-93

References

Adams, R., Almeida, H., & Ferreira, D. (2002). Powerful CEOs and their Impact on Corporate Performance, Working paper. Review of Financial Studies, 18, 1403-1432.
Albuquerue, R., & Wang, N. (2008). Agency conflicts, investment, and asset pricing. Journal of Finance. https://doi.org/10.1111/j.1540-6261.2008.01309.x
Anderson, C., & Kilduff, G. J. (2009). Why Do Dominant Personalities Attain Influence in Face-to- Face Groups? The Competence-Signaling Effects of Trait Dominance. Journal of Personality and Social Psychology. https://doi.org/10.1037/a0014201
Ashbaugh, H., Collins, D. W., & LaFond, R. (2004). Corporate Governance and the Cost of Equity Capital. Working Paper, December. https://doi.org/10.2139/ssrn.639681
Ashbaugh-Skaife, H., Collins, D. W., & LaFond, R. (2006). The effects of corporate governance on firms' credit ratings. Journal of Accounting and Economics. https://doi.org/10.1016/j.jacceco.2006.02.003
Bebchuk, L., Cohen, A., & Ferrell, A. (2009). What matters in corporate governance. Review of Financial Studies, 22(2), 783-827. https://doi.org/10.1093/rfs/hhn099
Bebchuk, Lucian A., Cremers, K. J. M., & Peyer, U. C. (2011). The CEO pay slice. Journal of Financial Economics. https://doi.org/10.1016/j.jfineco.2011.05.006
Bebchuk, Lucian Arye, & Fried, J. M. (2003). Executive compensation as an agency problem. Journal of Economic Perspectives. https://doi.org/10.1257/089533003769204362
Bebchuk, Lucian Arye, & Fried, J. M. (2012). Executive compensation as an agency problem. In The Economic Nature of the Firm: A Reader, Third Edition. https://doi.org/10.1017/CBO9780511817410.026
Bertrand, M., & Mullainathan, S. (2003). Enjoying the Quiet Life ? Corporate Governance and Managerial Preferences Author ( s ): Marianne Bertrand and Sendhil Mullainathan Enjoying the Quiet Life ? Corporate Governance Sendhil Mullainathan. Journal of Political Economy.
Billett, M. T. (2015). Shareholder-Manager Alignment and the Cost of Debt. SSRN Electronic Journal, January. https://ssrn.com/abstract=958991
Botosan, C. A., & Botosan, C. A. (2016). Disclosure Level and the Cost of Equity Capital Disclosure Level and the Cost of Equity Capital. 72(3), 323-349.
Bowen, R. M., Rajgopal, S., & Venkatachalam, M. (2008). Accounting discretion, corporate governance, and firm performance. In Contemporary Accounting Research. https://doi.org/10.1506/car.25.2.3
Bozec, R., & Bozec, Y. (2012). The use of governance indexes in the governance-performance relationship literature: International evidence. Canadian Journal of Administrative Sciences, 29(1), 79-98. https://doi.org/10.1002/CJAS.201
Chen, K. C. W., Chen, Z., & Wei, K. C. J. J. (2003). Disclosure, Corporate Governance, and the Cost of Equity Capital: Evidence from Asia's Emerging Markets. SSRN Electronic Journal, June 2003. https://doi.org/10.2139/ssrn.422000
Chen, K., Chen, & Wei. (2011). Agency costs of free cash flow and the effect of shareholder rights on the implied cost of equity capital. Journal of Financial and ..., April. http://journals.cambridge.org/production/action/cjoGetFulltext?fulltextid=8218522
Chen, X., Cheng, Q., & Dai, Z. (2013). Family ownership and CEO turnovers. Contemporary Accounting Research. https://doi.org/10.1111/j.1911-3846.2012.01185.x
Chen, Z., Huang, Y., & Wei, K. C. J. (2013). Executive pay disparity and the cost of equity capital. Journal of Financial and Quantitative Analysis. https://doi.org/10.1 017/S00221090 13000306
Coyne, B. S., & Coyne, E. J. (2007). Getting, keeping and caring for unpaid volunteers for professional golf tournament events. Human Resource Development International. https://doi.org/10.1080/13678860121999
Core, J. E., Guay, W. R., & Rusticus, T. O. (2006). Does weak governance cause weak stock returns? An examination of firm operating performance and investors' expectations. Journal of Finance. https://doi.org/10.1111/j.1540-6261.2006.00851.x
Da, Z., Guo, R. J., & Jagannathan, R. (2012). CAPM for estimating the cost of equity capital: Interpreting the empirical evidence. Journal of Financial Economics, 103(1), 204-220. https://doi.org/10.1016/j.jfineco.2011.08.011
Denis, D. J., Denis, D. K., & Yost, K. (2002). Global diversification, industrial diversification, and firm value. Journal of Finance. https://doi.org/10.1111/0022-1082.00485
Dinh, J. E., Lord, R. G., Gardner, W. L., Meuser, J. D., Liden, R. C., & Hu, J. (2014). Leadership theory and research in the new millennium: Current theoretical trends and changing perspectives. In Leadership Quarterly. https://doi.org/10.1016/j.leaqua.2013.11.005
Easton, P. (2007). Estimating the cost of capital implied by market prices and accounting data. In Foundations and Trends in Accounting. https://doi.org/10.1561/1400000009
Eccles, R. G., & Williamson, O. E. (1987). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. Administrative Science Quarterly. https://doi.org/10.2307/2392889
Elms, N., Nicholson, G., & Pugliese, A. (2015). The importance of group-fit in new director selection. Management Decision. https://doi.org/10.1108/MD-10-2014-0598
Fama, E. (2012). Agency problems and the theory of the firm. In The Economic Nature of the Firm: A Reader, Third Edition. https://doi.org/10.1017/CBO9780511817410.022
Francis, J., LaFond, R., Olsson, P. M., & Schipper, K. (2004). Costs of equity and earnings attributes. In Accounting Review. https://doi.org/10.2308/accr.2004.79.4.967
Frank, M. Z., & Shen, T. (2016). Investment and the weighted average cost of capital. Journal of Financial Economics. https://doi.org/10.1016/j.jfineco.2015.09.001
Friedman, S. D. (1988). Passing the Baton: Managing the Process of CEO SuccessionPassing the Baton: Managing the Process of CEO Succession By VancilRichard F., Cambridge, MA: Harvard Business School Press, 1988. 344 $24.95. Academy of Management Perspectives. https://doi.org/10.5465/ame.1988.4277271
Garmaise, M. J. (2005). Informed Investors and the Financing of Entrepreneurial Projects. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.263162
Garmaise, M. J., & Liu, J. (2011). Corruption, Firm Governance, and the Cost of Capital. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.644017
Gebhardt, W. R., Lee, C. M. C., & Swaminathan, B. (2001). Toward an implied cost of capital. Journal of Accounting Research. https://doi.org/10.1111/1475-679X.00007
Geeraerts, I. D., Cuyckens, H., Handbook, O., & Freeman, M. H. (2007). Electronic copy available at: http://ssrn.com/abstract=1413947. Cognitive Linguistics, 44, 1-27. https://doi.org/http://dx.doi.org/10.2139/
Giannetti, M., & Simonov, A. (2006). Which investors fear expropriation? Evidence from investors' portfolio choices. Journal of Finance. https://doi.org/10.1111/j.1540-6261.2006.00879.x
Gompers, Paul; Ishii, Joy; Metrick, A. (2003). Corporate Governance and Equity Prices. Quarterly Journal of Economics,118(February), 107-155. https://doi.org/10.1162/ 0033553036053 5162
Jiraporn, P., Jiraporn, P., Kim, Y. S., Kim, Y. S., Davidson, W. N., Davidson, W. N., Singh, M., & Singh, M. (2006). Corporate governance, shareholder rights and rm diversi cation: An empirical analysis. Journal of Banking & Finance, 30(503), 947-963. https://doi.org/10.1016/j.jbank
Kale, J. R., Reis, E., & Venkateswaran, A. (2009). Rank-order tournaments and incentive alignment: The effect on firm performance. Journal of Finance. https://doi.org/10.1111/j.1540- 6261.2009.01470.x
Khan, M. Y. (2016). Corporate Governance and Cost of Capital: Evidence from Pakistani Listed Firms. http://theses.gla.ac.uk/7722/1/2016KhanPhD.pdf
La Porta, R., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics. https://doi.org/10.2469/dig.v31.n2.870
Li, T., Munir, Q., & Abd Karim, M. R. (2017). Nonlinear relationship between CEO power and capital structure: Evidence from China's listed SMEs. International Review of Economics and Finance, 47, 1-21. https://doi.org/10.1016/j.iref.2016.09.005
Lombardo, D., & Pagano, M. (2005). Law and Equity Markets: A Simple Model. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.209312
Masulis, R. W., & Mobbs, S. (2011). Are All Inside Directors the Same? Evidence from the External Directorship Market. Journal of Finance. https://doi.org/10.1111/j.1540- 6261.2011.01653.x
MERTON, R. C. (1987). A Simple Model of Capital Market Equilibrium with Incomplete Information. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.1987.tb04565.x
Rajan, R. G., & Wulf, J. (2006). The flattening firm: Evidence from panel data on the changing nature of corporate hierarchies. Review of Economics and Statistics. https://doi.org/10.1162/rest.88.4.759
Sebai, S., Messai, M., & Jouini, F. (2015). Earnings attributes and the cost of equity capital: The case of Tunisian companies. Afro-Asian Journal of Finance and Accounting. https://doi.org/10.1504/AAJFA.2015.070287
Shleifer, A., & Vishny, R. W. (1997). The limits of arbitrage. Journal of Finance. https://doi.org/10.1111/j.1540-6261.1997.tb03807.x
Zhang, Y., & Rajagopalan, N. (2010). CEO succession planning: Finally at the center stage of the boardroom. In Business Horizons. https://doi.org/10.1016/j.bushor.2010.05.003

References

Adams, R., Almeida, H., & Ferreira, D. (2002). Powerful CEOs and their Impact on Corporate Performance, Working paper. Review of Financial Studies, 18, 1403-1432.
Albuquerue, R., & Wang, N. (2008). Agency conflicts, investment, and asset pricing. Journal of Finance. https://doi.org/10.1111/j.1540-6261.2008.01309.x
Anderson, C., & Kilduff, G. J. (2009). Why Do Dominant Personalities Attain Influence in Face-to- Face Groups? The Competence-Signaling Effects of Trait Dominance. Journal of Personality and Social Psychology. https://doi.org/10.1037/a0014201
Ashbaugh, H., Collins, D. W., & LaFond, R. (2004). Corporate Governance and the Cost of Equity Capital. Working Paper, December. https://doi.org/10.2139/ssrn.639681
Ashbaugh-Skaife, H., Collins, D. W., & LaFond, R. (2006). The effects of corporate governance on firms' credit ratings. Journal of Accounting and Economics. https://doi.org/10.1016/j.jacceco.2006.02.003
Bebchuk, L., Cohen, A., & Ferrell, A. (2009). What matters in corporate governance. Review of Financial Studies, 22(2), 783-827. https://doi.org/10.1093/rfs/hhn099
Bebchuk, Lucian A., Cremers, K. J. M., & Peyer, U. C. (2011). The CEO pay slice. Journal of Financial Economics. https://doi.org/10.1016/j.jfineco.2011.05.006
Bebchuk, Lucian Arye, & Fried, J. M. (2003). Executive compensation as an agency problem. Journal of Economic Perspectives. https://doi.org/10.1257/089533003769204362
Bebchuk, Lucian Arye, & Fried, J. M. (2012). Executive compensation as an agency problem. In The Economic Nature of the Firm: A Reader, Third Edition. https://doi.org/10.1017/CBO9780511817410.026
Bertrand, M., & Mullainathan, S. (2003). Enjoying the Quiet Life ? Corporate Governance and Managerial Preferences Author ( s ): Marianne Bertrand and Sendhil Mullainathan Enjoying the Quiet Life ? Corporate Governance Sendhil Mullainathan. Journal of Political Economy.
Billett, M. T. (2015). Shareholder-Manager Alignment and the Cost of Debt. SSRN Electronic Journal, January. https://ssrn.com/abstract=958991
Botosan, C. A., & Botosan, C. A. (2016). Disclosure Level and the Cost of Equity Capital Disclosure Level and the Cost of Equity Capital. 72(3), 323-349.
Bowen, R. M., Rajgopal, S., & Venkatachalam, M. (2008). Accounting discretion, corporate governance, and firm performance. In Contemporary Accounting Research. https://doi.org/10.1506/car.25.2.3
Bozec, R., & Bozec, Y. (2012). The use of governance indexes in the governance-performance relationship literature: International evidence. Canadian Journal of Administrative Sciences, 29(1), 79-98. https://doi.org/10.1002/CJAS.201
Chen, K. C. W., Chen, Z., & Wei, K. C. J. J. (2003). Disclosure, Corporate Governance, and the Cost of Equity Capital: Evidence from Asia's Emerging Markets. SSRN Electronic Journal, June 2003. https://doi.org/10.2139/ssrn.422000
Chen, K., Chen, & Wei. (2011). Agency costs of free cash flow and the effect of shareholder rights on the implied cost of equity capital. Journal of Financial and ..., April. http://journals.cambridge.org/production/action/cjoGetFulltext?fulltextid=8218522
Chen, X., Cheng, Q., & Dai, Z. (2013). Family ownership and CEO turnovers. Contemporary Accounting Research. https://doi.org/10.1111/j.1911-3846.2012.01185.x
Chen, Z., Huang, Y., & Wei, K. C. J. (2013). Executive pay disparity and the cost of equity capital. Journal of Financial and Quantitative Analysis. https://doi.org/10.1 017/S00221090 13000306
Coyne, B. S., & Coyne, E. J. (2007). Getting, keeping and caring for unpaid volunteers for professional golf tournament events. Human Resource Development International. https://doi.org/10.1080/13678860121999
Core, J. E., Guay, W. R., & Rusticus, T. O. (2006). Does weak governance cause weak stock returns? An examination of firm operating performance and investors' expectations. Journal of Finance. https://doi.org/10.1111/j.1540-6261.2006.00851.x
Da, Z., Guo, R. J., & Jagannathan, R. (2012). CAPM for estimating the cost of equity capital: Interpreting the empirical evidence. Journal of Financial Economics, 103(1), 204-220. https://doi.org/10.1016/j.jfineco.2011.08.011
Denis, D. J., Denis, D. K., & Yost, K. (2002). Global diversification, industrial diversification, and firm value. Journal of Finance. https://doi.org/10.1111/0022-1082.00485
Dinh, J. E., Lord, R. G., Gardner, W. L., Meuser, J. D., Liden, R. C., & Hu, J. (2014). Leadership theory and research in the new millennium: Current theoretical trends and changing perspectives. In Leadership Quarterly. https://doi.org/10.1016/j.leaqua.2013.11.005
Easton, P. (2007). Estimating the cost of capital implied by market prices and accounting data. In Foundations and Trends in Accounting. https://doi.org/10.1561/1400000009
Eccles, R. G., & Williamson, O. E. (1987). The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting. Administrative Science Quarterly. https://doi.org/10.2307/2392889
Elms, N., Nicholson, G., & Pugliese, A. (2015). The importance of group-fit in new director selection. Management Decision. https://doi.org/10.1108/MD-10-2014-0598
Fama, E. (2012). Agency problems and the theory of the firm. In The Economic Nature of the Firm: A Reader, Third Edition. https://doi.org/10.1017/CBO9780511817410.022
Francis, J., LaFond, R., Olsson, P. M., & Schipper, K. (2004). Costs of equity and earnings attributes. In Accounting Review. https://doi.org/10.2308/accr.2004.79.4.967
Frank, M. Z., & Shen, T. (2016). Investment and the weighted average cost of capital. Journal of Financial Economics. https://doi.org/10.1016/j.jfineco.2015.09.001
Friedman, S. D. (1988). Passing the Baton: Managing the Process of CEO SuccessionPassing the Baton: Managing the Process of CEO Succession By VancilRichard F., Cambridge, MA: Harvard Business School Press, 1988. 344 $24.95. Academy of Management Perspectives. https://doi.org/10.5465/ame.1988.4277271
Garmaise, M. J. (2005). Informed Investors and the Financing of Entrepreneurial Projects. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.263162
Garmaise, M. J., & Liu, J. (2011). Corruption, Firm Governance, and the Cost of Capital. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.644017
Gebhardt, W. R., Lee, C. M. C., & Swaminathan, B. (2001). Toward an implied cost of capital. Journal of Accounting Research. https://doi.org/10.1111/1475-679X.00007
Geeraerts, I. D., Cuyckens, H., Handbook, O., & Freeman, M. H. (2007). Electronic copy available at: http://ssrn.com/abstract=1413947. Cognitive Linguistics, 44, 1-27. https://doi.org/http://dx.doi.org/10.2139/
Giannetti, M., & Simonov, A. (2006). Which investors fear expropriation? Evidence from investors' portfolio choices. Journal of Finance. https://doi.org/10.1111/j.1540-6261.2006.00879.x
Gompers, Paul; Ishii, Joy; Metrick, A. (2003). Corporate Governance and Equity Prices. Quarterly Journal of Economics,118(February), 107-155. https://doi.org/10.1162/ 0033553036053 5162
Jiraporn, P., Jiraporn, P., Kim, Y. S., Kim, Y. S., Davidson, W. N., Davidson, W. N., Singh, M., & Singh, M. (2006). Corporate governance, shareholder rights and rm diversi cation: An empirical analysis. Journal of Banking & Finance, 30(503), 947-963. https://doi.org/10.1016/j.jbank
Kale, J. R., Reis, E., & Venkateswaran, A. (2009). Rank-order tournaments and incentive alignment: The effect on firm performance. Journal of Finance. https://doi.org/10.1111/j.1540- 6261.2009.01470.x
Khan, M. Y. (2016). Corporate Governance and Cost of Capital: Evidence from Pakistani Listed Firms. http://theses.gla.ac.uk/7722/1/2016KhanPhD.pdf
La Porta, R., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics. https://doi.org/10.2469/dig.v31.n2.870
Li, T., Munir, Q., & Abd Karim, M. R. (2017). Nonlinear relationship between CEO power and capital structure: Evidence from China's listed SMEs. International Review of Economics and Finance, 47, 1-21. https://doi.org/10.1016/j.iref.2016.09.005
Lombardo, D., & Pagano, M. (2005). Law and Equity Markets: A Simple Model. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.209312
Masulis, R. W., & Mobbs, S. (2011). Are All Inside Directors the Same? Evidence from the External Directorship Market. Journal of Finance. https://doi.org/10.1111/j.1540- 6261.2011.01653.x
MERTON, R. C. (1987). A Simple Model of Capital Market Equilibrium with Incomplete Information. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.1987.tb04565.x
Rajan, R. G., & Wulf, J. (2006). The flattening firm: Evidence from panel data on the changing nature of corporate hierarchies. Review of Economics and Statistics. https://doi.org/10.1162/rest.88.4.759
Sebai, S., Messai, M., & Jouini, F. (2015). Earnings attributes and the cost of equity capital: The case of Tunisian companies. Afro-Asian Journal of Finance and Accounting. https://doi.org/10.1504/AAJFA.2015.070287
Shleifer, A., & Vishny, R. W. (1997). The limits of arbitrage. Journal of Finance. https://doi.org/10.1111/j.1540-6261.1997.tb03807.x
Zhang, Y., & Rajagopalan, N. (2010). CEO succession planning: Finally at the center stage of the boardroom. In Business Horizons. https://doi.org/10.1016/j.bushor.2010.05.003