Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/36033
Title: Political rights and equity pricing
Authors: Boubakri, N
El Ghoul, S
Saffar, W 
Keywords: Political rights
Legal institutions
Cost of equity
Issue Date: 2014
Publisher: North-Holland
Source: Journal of corporate finance, 2014, v. 27, p. 326-344 How to cite?
Journal: Journal of corporate finance 
Abstract: We examine the influence of political rights on the implied cost of equity capital using a sample affirms from 44 countries. We find that firms' equity financing costs are lower when political rights are stronger. We further find that political institutions' direct impact on the cost of equity capital is incremental to that of legal institutions. Economically, our results imply that a one standard deviation increase in political rights is associated with a 38 basis point decrease in corporate cost of equity capital. In additional analyses, we find that the effect of political rights on equity pricing is more pronounced in countries with weak legal institutions.
URI: http://hdl.handle.net/10397/36033
ISSN: 0929-1199
DOI: 10.1016/j.jcorpfin.2014.05.009
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