Cost of Capital and the Role of Institutional Ownership
نویسنده
چکیده
We examine the relationship between the institutional ownership and the cost of capital. Using firm-level data for the period from 1990 to 2006, we find that changes in dedicated (transient) ownership generally lower (increase) the investee’s cost of capital. Dividing the data into highversus low-leverage investees, we find that highly levered investees benefit the most from an increase in dedicated ownership. Overall, the results suggest that ownership changes made by dedicated institutional investors can lower the investee’s cost of financing. We used different methods to check the robustness of our results.
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