Product market competition, corporate governance, and cost of capital
Date of Original Version
We investigate how market competition and corporate governance affect a firm's cost of equity and debt. We find firms with better corporate governance have a lower cost of equity and cost of debt. However, we find that the negative relation between cost of capital and governance primarily holds for firms in highly competitive industries. The relation between governance and cost of capital does not hold if the industry competition is weak. © 2014 Taylor & Francis.
Applied Economics Letters
Hodges, Charles W., Bingxuan Lin, and Chen Miao Lin. "Product market competition, corporate governance, and cost of capital." Applied Economics Letters 21, 13 (2014): 906-913. doi:10.1080/13504851.2014.896978.