A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms
Purpose: This study explores the intricate relationships between various corporate governance variables and the Capital Asset Pricing Model (CAPM) as a proxy for the cost of equity for non-financial firms listed on Pakistan Stock Exchange (PSX) during the period from 2011 to 2020. Design/Methodo...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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CSRC Publishing
2023-12-01
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| Series: | Sustainable Business and Society in Emerging Economies |
| Subjects: | |
| Online Access: | https://publishing.globalcsrc.org/ojs/index.php/sbsee/article/view/2805 |
| _version_ | 1797373810057412608 |
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| author | Muhammad Imran Khan Maria Shams Khakwani Rabia Luqman Rehana Kouser |
| author_facet | Muhammad Imran Khan Maria Shams Khakwani Rabia Luqman Rehana Kouser |
| author_sort | Muhammad Imran Khan |
| collection | DOAJ |
| description |
Purpose: This study explores the intricate relationships between various corporate governance variables and the Capital Asset Pricing Model (CAPM) as a proxy for the cost of equity for non-financial firms listed on Pakistan Stock Exchange (PSX) during the period from 2011 to 2020.
Design/Methodology/Approach: Employing a convenience sampling approach and fixed effects regression to account for unobserved heterogeneity, the research discerns both significant and non-significant associations, offering insights into the unique dynamics of the Pakistani financial landscape.
Findings: Notable findings include direct and statistically significant association between BETA and CAPM, as well as the influential role of CEO duality. The Coefficient of Variation (CV), Earnings Before Interest and Taxes (EBIT), and governance-related factors like the governance index and insider ownership exhibit significant associations with CAPM. Conversely, board size, board independence, market-to-book ratio (MBR), and market debt ratio do not show statistically significant impacts on the cost of equity.
Implications/Originality/Value These nuanced results contribute valuable insights for financial decision-makers and policymakers operating within the specific context of the PSX.
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| first_indexed | 2024-03-08T18:54:53Z |
| format | Article |
| id | doaj.art-6480b94c83484081ba636a778e60d1e1 |
| institution | Directory Open Access Journal |
| issn | 2708-2504 2708-2172 |
| language | English |
| last_indexed | 2024-03-08T18:54:53Z |
| publishDate | 2023-12-01 |
| publisher | CSRC Publishing |
| record_format | Article |
| series | Sustainable Business and Society in Emerging Economies |
| spelling | doaj.art-6480b94c83484081ba636a778e60d1e12023-12-28T13:51:56ZengCSRC PublishingSustainable Business and Society in Emerging Economies2708-25042708-21722023-12-015410.26710/sbsee.v5i4.2805A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed FirmsMuhammad Imran Khan0Maria Shams Khakwani1Rabia Luqman2Rehana Kouser3Govt Associate College, Sinawan, PakistanThe Women University Multan, PakistanComsats University Islamabad, Vehari Campus, PakistanBahauddin Zakariya University, Multan, Pakistan Purpose: This study explores the intricate relationships between various corporate governance variables and the Capital Asset Pricing Model (CAPM) as a proxy for the cost of equity for non-financial firms listed on Pakistan Stock Exchange (PSX) during the period from 2011 to 2020. Design/Methodology/Approach: Employing a convenience sampling approach and fixed effects regression to account for unobserved heterogeneity, the research discerns both significant and non-significant associations, offering insights into the unique dynamics of the Pakistani financial landscape. Findings: Notable findings include direct and statistically significant association between BETA and CAPM, as well as the influential role of CEO duality. The Coefficient of Variation (CV), Earnings Before Interest and Taxes (EBIT), and governance-related factors like the governance index and insider ownership exhibit significant associations with CAPM. Conversely, board size, board independence, market-to-book ratio (MBR), and market debt ratio do not show statistically significant impacts on the cost of equity. Implications/Originality/Value These nuanced results contribute valuable insights for financial decision-makers and policymakers operating within the specific context of the PSX. https://publishing.globalcsrc.org/ojs/index.php/sbsee/article/view/2805Corporate GovernanceCost of EquityCapital Asset Pricing Model (CAPM)Pakistan Stock Exchange (PSX) |
| spellingShingle | Muhammad Imran Khan Maria Shams Khakwani Rabia Luqman Rehana Kouser A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms Sustainable Business and Society in Emerging Economies Corporate Governance Cost of Equity Capital Asset Pricing Model (CAPM) Pakistan Stock Exchange (PSX) |
| title | A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms |
| title_full | A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms |
| title_fullStr | A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms |
| title_full_unstemmed | A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms |
| title_short | A Comprehensive Examination of Corporate Governance's Impact on the Cost of Equity: Evidence from Pakistani Non-Financial Listed Firms |
| title_sort | comprehensive examination of corporate governance s impact on the cost of equity evidence from pakistani non financial listed firms |
| topic | Corporate Governance Cost of Equity Capital Asset Pricing Model (CAPM) Pakistan Stock Exchange (PSX) |
| url | https://publishing.globalcsrc.org/ojs/index.php/sbsee/article/view/2805 |
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