TY  - JOUR
AB  - Purpose– The purpose of this study is to investigate the relationship between dominant shareholders, whose voting rights exceed cash flow rights (excess control), and firms’ cost of capital, including both equity capital and debt. Design/methodology/approach– This research is conducted in Canada over a four-year period from 2002 to 2005 and uses panel data of 155 S&P/TSX firms. The weighted average cost of capital is regressed on excess control using fixed-effect regressions in a two-stage least squares framework. Findings– The paper finds evidence that the cost of capital increases with excess control. The paper also confirms that for firms incorporated under the less protective Quebec incorporation law the excess control and, therefore, cost of capital is higher than for firms incorporated in the other provinces under the common law regime. Originality value– Prior work examined the relationship between excess control and firm value, mostly Tobin's Q. By using cost of capital, the study explores another channel through witch excess control may affect firm value.
VL  - 10
IS  - 1
SN  - 1743-9132
DO  - 10.1108/IJMF-12-2010-0095
UR  - https://doi.org/10.1108/IJMF-12-2010-0095
AU  - Bozec Yves
AU  - Laurin Claude
AU  - Meier Iwan
PY  - 2014
Y1  - 2014/01/01
TI  - The relation between excess control and cost of capital
T2  - International Journal of Managerial Finance
PB  - Emerald Group Publishing Limited
SP  - 93
EP  - 114
Y2  - 2024/04/26
ER  -