Exchange-listing effects on a firm's cost of equity capital

Matched pairs (based on asset size and industry) of a sample of exchange-listed and over-the-counter (OTC) firms are utilized to test for the existence of a statistically significant difference between them with respect to their cost of equity capital. It is found that exchange-listed firm's cost of equity capital (alternatively measured by the systematic risk and the total risk associated with a firm's rate of return) is significantly less than that of comparable OTC firms.