Management entrenchment and the cost of equity capital

Denton Collins, Henry Huang

Research output: Contribution to journalArticlepeer-review

8 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 languageEnglish
Pages (from-to)356-362
Number of pages7
JournalJournal of Business Research
Volume64
Issue number4
DOIs
StatePublished - Apr 2011

Keywords

  • Cost of capital
  • Governance risk
  • Management entrenchment

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