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    Online Resource
    Online Resource
    Investor Protection, Ownership, and the Cost of Capital (2002)
    Washington, D.C : The World Bank
    Details
    Language: English
    Pages: Online-Ressource (1 online resource (56 p.))
    Edition: Online-Ausg. World Bank E-Library Archive
    Parallel Title: Love, Inessa Investor Protection, Ownership, and the Cost of Capital
    Keywords: Capital Investment ; Capital Stock ; Contract ; Debt Markets ; Economic Theory and Research ; Emerging Markets ; Equity ; Equity Stakes ; Finance ; Finance and Financial Sector Development ; Financial Development ; Financial Literacy ; Holding ; Investment ; Investment Decisions ; Investment and Investment Climate ; Investor ; Investor Protection ; Labor Policies ; Macroeconomics and Economic Growth ; Microfinance ; Political Economy ; Private Sector Development ; Social Protections and Labor ; Capital Investment ; Capital Stock ; Contract ; Debt Markets ; Economic Theory and Research ; Emerging Markets ; Equity ; Equity Stakes ; Finance ; Finance and Financial Sector Development ; Financial Development ; Financial Literacy ; Holding ; Investment ; Investment Decisions ; Investment and Investment Climate ; Investor ; Investor Protection ; Labor Policies ; Macroeconomics and Economic Growth ; Microfinance ; Political Economy ; Private Sector Development ; Social Protections and Labor ; Capital Investment ; Capital Stock ; Contract ; Debt Markets ; Economic Theory and Research ; Emerging Markets ; Equity ; Equity Stakes ; Finance ; Finance and Financial Sector Development ; Financial Development ; Financial Literacy ; Holding ; Investment ; Investment Decisions ; Investment and Investment Climate ; Investor ; Investor Protection ; Labor Policies ; Macroeconomics and Economic Growth ; Microfinance ; Political Economy ; Private Sector Development ; Social Protections and Labor
    Abstract: Himmelberg, Hubbard, and Love combine the agency theory of the firm with risk diversification incentives for insiders. Principal-agent problems between insiders and outsiders force insiders to retain a larger share in their firm than they would under a perfect risk diversification strategy. The authors predict that this higher share of insider ownership and the resulting exposure of insiders to higher idiosyncratic risk will result in underinvestment and higher cost of capital. Using firm-level data from 38 countries, the authors provide evidence in support of their theoretical model, showing that the premium for bearing idiosyncratic risk varies between zero and six percent and decreases in the level of outside investor protection. The results of the study imply that policies aimed at strengthening investor protection laws and their enforcement will improve capital allocation and result in higher growth. This paper—a product of Finance, Development Research Group—is part of a larger effort in the group to study corporate governance and access to finance. The authors may be contacted at cph15columbia.edu or ilove@worldbank.org
    URL: Volltext  (Deutschlandweit zugänglich)
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