The Effect of Corporate Governance Policies on Reducing the Cost of Capital of Listed Romanian Companies
Author:
Univ. Prof. Ion IONAŞCU, Ph.D., Univ. Prof. Lavinia OLIMID, Ph.D., Lecturer Mihaela IONAŞCU, Ph.D., Univ. Prof. Daniela Artemisa CALU, Ph.D.
JEL:
G32, M41
DOI:
Keywords:
cost of capital, corporate governance, IFRS adoption
Abstract:
The adoption of IFRS (which are regarded as high quality standards) is expected to increase transparency in financial reporting, and consequently reduce the cost of capital. However, recent studies (Chen, Chen and Wei (2004)) have shown that for emergent markets with weak corporate governance systems, the magnitude of cost of capital is not affected by the quality of financial reporting. Accordingly, the purpose of this paper is to investigate the extent to which there is a negative correlation between the policies of corporate governance of listed Romanian companies and their relative cost of capital. The results showed that evolved corporate governance practices did not lead to a decrease in the cost of capital for companies listed at Bucharest Stock Exchange.\r\n\r\n