Global Financial Crisis and Role of Ownership Structure on Cost of Capital

Abstract

This paper explores the relationship between ownership structure and cost of capital. Prior studies established links between ownership structure, firm’s performance and cost of capital where their results are mixed and inconclusive. As ownership structure is one of the important issues in each corporate especially in listed companies, this study tries to track the relationship between ownership structure and cost of capital in listed companies. Although the important role of ownership structure is obvious to academics and practitioners, the expectation of managers and shareholders is that this characteristic of corporate protects the company either in normal situation of in crisis situation. This study tries to explore the role of ownership structure on cost of capital during and after financial crisis. A panel regression method was employed to address these questions. Findings of this study document a negative role for ownership structure on cost of capital during global financial crisis.