Institutional Investors, Private Information, and the Cost of Capital

2011 ◽  
Author(s):  
Huong Giang (Lily) Nguyen ◽  
Xiangkang Yin ◽  
Luong Hoang Luong
Keyword(s):  
Private Information ◽  
Institutional Investors ◽  
Cost Of Capital ◽  
The Cost

scholarly journals Institutional investors and cost of capital: The moderating effect of ownership structure

PLoS ONE ◽  
2021 ◽  
Vol 16 (4) ◽  
pp. e0249963
Author(s):  
Xiaoping Huo ◽  
Hongying Lin ◽  
Yanan Meng ◽  
Peter Woods
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Capital Market ◽  
Institutional Investors ◽  
Cost Of Capital ◽  
Listed Companies ◽  
Moderating Effect ◽  
Theory And Practice ◽  
The Cost ◽  
The Relationship

Guiding institutional investors to actively participate in corporate governance is a hot issue to improve the internal governance of China’s listed companies. This study seeks to provide a comprehensive understanding of the mechanism that underlies the governance effects of the heterogeneity of institutional investors on the cost of capital, and the influence of ownership structure on the relationship between them. Using an unbalanced panel data on A-share listed companies of Shanghai and Shenzhen in China’s capital market during the 2014–2019 period, this study reveals how institutional investors with longer holding period and higher shareholding ratio are negatively associated with the cost of capital in China’s capital market. Furthermore, this study successfully confirms the moderating effect of ownership structure in the relationship between institutional investors and the cost of capital. China’s state-owned enterprises are more likely to introduce improvements at the corporate governance level, and ownership concentration weakens the negative influence of institutional investors on the cost of capital. The research contributes to a deeper understanding of the impacts of institutional investor’s heterogeneity and ownership structure on the cost of capital in China. In the process, the study yields useful implications for the theory and practice of corporate governance.

Information, Investment Adjustment, and the Cost of Capital

2018 ◽  
Vol 53 (4) ◽  
pp. 1715-1754 ◽  
Author(s):  
Lixin Huang ◽  
Qiang Kang
Keyword(s):  
Private Information ◽  
Stock Prices ◽  
Cost Of Capital ◽  
Growth Firms ◽  
High Flexibility ◽  
The Cost

Private information imposes a severe trading disadvantage on uninformed traders while at the same time providing firms with valuable signals for investment adjustment. The two forces have opposite impacts on the cost of capital, and the net effect depends on which force dominates. We show that stocks of firms with low flexibility in investment adjustment (“value firms”) command an information premium, whereas stocks of firms with high flexibility in investment adjustment (“growth firms”) deliver an information discount. These results are consistent with the findings that growth firms exhibit stronger investment sensitivity to information in stock prices than value firms.

An Introduction to the Cost of Capital

2010 ◽  
Author(s):  
Ignacio Velez-Pareja ◽  
Joseph Tham
Keyword(s):  
Cost Of Capital ◽  
The Cost
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