Management entrenchment and the cost of equity capital

Denton Collins; Henry Huang

doi:10.1016/j.jbusres.2010.02.013

Management entrenchment and the cost of equity capital

Denton Collins, Henry Huang

Business Administration

Research output: Contribution to journal › Article › peer-review

13 Scopus citations

Abstract

This paper investigates the effect of management entrenchment on the cost of equity capital. Using the Bebchuk et al. (2009) entrenchment index data from 1989 through 2002, and using mainly the Ohlson and Juettner-Nauroth (2005) method to estimate the cost of capital, we find that increases (decreases) in management entrenchment are associated with increases (decreases) in costs of equity capital.

Original language	English
Pages (from-to)	356-362
Number of pages	7
Journal	Journal of Business Research
Volume	64
Issue number	4
DOIs	https://doi.org/10.1016/j.jbusres.2010.02.013
State	Published - Apr 2011

Keywords

Cost of capital
Governance risk
Management entrenchment

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10.1016/j.jbusres.2010.02.013

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AB - This paper investigates the effect of management entrenchment on the cost of equity capital. Using the Bebchuk et al. (2009) entrenchment index data from 1989 through 2002, and using mainly the Ohlson and Juettner-Nauroth (2005) method to estimate the cost of capital, we find that increases (decreases) in management entrenchment are associated with increases (decreases) in costs of equity capital.

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Management entrenchment and the cost of equity capital

Abstract

Keywords

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