Critical review of literature on corporate governance and the cost of capital:the value creation perspective
Corporate governance encompasses a broad spectrum of mechanisms intended to mitigate agency risk by increasing the monitoring of managements’ actions, limiting managers’ opportunistic behaviour, and improving the quality of firms’ information flows. A torrent of literature explains that corporate go...
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| Format: | Article |
| Language: | English |
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African Journal of Business Management
2010
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| Online Access: | http://irep.iium.edu.my/15486/ http://irep.iium.edu.my/15486/1/Critical_review_of_literature_on_corporate_governance.pdf |
| _version_ | 1848777810624118784 |
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| author | Ab. Rashid, Hafiz Majdi |
| author_facet | Ab. Rashid, Hafiz Majdi |
| author_sort | Ab. Rashid, Hafiz Majdi |
| building | IIUM Repository |
| collection | Online Access |
| description | Corporate governance encompasses a broad spectrum of mechanisms intended to mitigate agency risk by increasing the monitoring of managements’ actions, limiting managers’ opportunistic behaviour, and improving the quality of firms’ information flows. A torrent of literature explains that corporate governance mechanisms are able to enhance a firm’s value. A firm’s value is commonly measured using either market or accounting performance measures. Alternatively, a value is created when a firm enjoys a reduction in its cost of capital. Theoretically, firms that have robust monitoring devices including strong protection of stakeholders’ rights will be able to limit the extent of managerial power abuse and prudently allocate resources. This type of firm should have lower risk and access to cheaper sources of capital than other firms. This paper aimed to provide a critical review of literature on the effect of corporate governance on the cost of capital emphasising on the value creation perspective of corporate governance. |
| first_indexed | 2025-11-14T14:51:54Z |
| format | Article |
| id | iium-15486 |
| institution | International Islamic University Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-14T14:51:54Z |
| publishDate | 2010 |
| publisher | African Journal of Business Management |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | iium-154862012-02-20T08:40:33Z http://irep.iium.edu.my/15486/ Critical review of literature on corporate governance and the cost of capital:the value creation perspective Ab. Rashid, Hafiz Majdi HB Economic Theory HD72 Economic growth, development, planning Corporate governance encompasses a broad spectrum of mechanisms intended to mitigate agency risk by increasing the monitoring of managements’ actions, limiting managers’ opportunistic behaviour, and improving the quality of firms’ information flows. A torrent of literature explains that corporate governance mechanisms are able to enhance a firm’s value. A firm’s value is commonly measured using either market or accounting performance measures. Alternatively, a value is created when a firm enjoys a reduction in its cost of capital. Theoretically, firms that have robust monitoring devices including strong protection of stakeholders’ rights will be able to limit the extent of managerial power abuse and prudently allocate resources. This type of firm should have lower risk and access to cheaper sources of capital than other firms. This paper aimed to provide a critical review of literature on the effect of corporate governance on the cost of capital emphasising on the value creation perspective of corporate governance. African Journal of Business Management 2010 Article NonPeerReviewed application/pdf en http://irep.iium.edu.my/15486/1/Critical_review_of_literature_on_corporate_governance.pdf Ab. Rashid, Hafiz Majdi (2010) Critical review of literature on corporate governance and the cost of capital:the value creation perspective. African Journal of Business Management, 4 (11). pp. 2198-2204. ISSN 1993-8233 http://www.academicjournals.org/ajbm/abstracts/abstracts/abstracts2010/4Sept/Ramly%20and%20Rashid.htm |
| spellingShingle | HB Economic Theory HD72 Economic growth, development, planning Ab. Rashid, Hafiz Majdi Critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| title | Critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| title_full | Critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| title_fullStr | Critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| title_full_unstemmed | Critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| title_short | Critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| title_sort | critical review of literature on corporate governance and the cost of capital:the value creation perspective |
| topic | HB Economic Theory HD72 Economic growth, development, planning |
| url | http://irep.iium.edu.my/15486/ http://irep.iium.edu.my/15486/ http://irep.iium.edu.my/15486/1/Critical_review_of_literature_on_corporate_governance.pdf |