Board Reforms and the Cost of Equity: International Evidence

45 Pages Posted: 5 Aug 2020

See all articles by Maoliang Li

Maoliang Li

Xiamen University - Institute for Financial and Accounting Studies

Ji (George) Wu

Massey University - School of Economics and Finance

Liansheng Zhang

Chinese Academy of Sciences (CAS) - State Key Laboratory of Cell Biology

Liping Zou

School of Economics and Finance, Massey Univeristy, Albany

Date Written: May 8, 2020

Abstract

We examine the impact of corporate board reforms on the 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 increases in the COE. Our results suggest that board reforms are considered inefficient to mitigate agency problems.

Keywords: Board Reforms; Cost of Equity; Corporate Governance; Cross-Country Study

JEL Classification: G14; G32; K151

Suggested Citation

Li, Maoliang and Wu, Ji (George) and Zhang, Liansheng and Zou, Liping, Board Reforms and the Cost of Equity: International Evidence (May 8, 2020). Available at SSRN: https://ssrn.com/abstract=3646598 or http://dx.doi.org/10.2139/ssrn.3646598

Maoliang Li

Xiamen University - Institute for Financial and Accounting Studies ( email )

422 Siming South Road
Xiamen, Fujian 361005
China
0592-2182768 (Phone)
0592-2181787 (Fax)

HOME PAGE: http://ifas.xmu.edu.cn/info/1023/1908.htm

Ji (George) Wu (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 102904
North Shore
Auckland, Auckland 0745
New Zealand
+6292127089 (Phone)

Liansheng Zhang

Chinese Academy of Sciences (CAS) - State Key Laboratory of Cell Biology ( email )

320 Yue Yang Road
Shanghai, 200031
China

Liping Zou

School of Economics and Finance, Massey Univeristy, Albany ( email )

Auckland, 0745
New Zealand

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