|
|||||
|
|
Board reforms and the cost of equity: International evidence |
|
| Authors: | Maoliang Li Ji Wu Liansheng Zhang Liping Zou |
| Institution: | 1. The Institute for Financial and Accounting Studies, Xiamen University, Center for Accounting Studies of Xiamen University, Xiamen, China
Maoliang Li acknowleges the financial support from the National Natural Science Foundation of China (grant numbers: 71502150, 71672157, 71790601, 71972163 and 71572161), Fundamental Research Funds for the Central Universities (grant number: 20720151142), and the Distinguished Young Scientific Research Talents Plan in Universities of Fujian Province (2016).;2. School of Economics and Finance, Massey Business School, Massey University, Auckland, New Zealand;3. College of Medicine, Wuhan University of Science and Technology, Wuhan, China |
| Abstract: | We examine the impact of corporate board reforms on the cost of equity (COE) using a sample of data in 41 countries for the period from 1992 to 2012. We find a significant increase in the COE after board reforms worldwide. This effect is eased for firms in countries under a comply-or-explain reform approach, as well as for firms in emerging countries. We further conclude that board reforms involving board independence, audit committee and auditor independence, and the separation of the CEO and Chairman positions, result in increases in the COE. Our results suggest that board reforms are considered inefficient to mitigate agency problems. |
| Keywords: | Board reforms Corporate governance Cost of equity Cross-country study |